NEW ZEALAND - New Zealand's Federated Farmers organisation has welcomed the announcement that the Financial Markets Authority and Reserve Bank have formally approved NZX’s milk price futures and options contracts.
Expected to launch in May 2016, these are designed to address growing demand from both producers and purchasers of milk to manage risk around price fluctuations.
“It won’t be for everyone, but this will give New Zealand dairy farmers a risk management tool that makes their business less susceptible to significant price fluctuations, and in doing so puts us on a more level playing field with most of our international competitors who already have this sort of tool available to them,” said Federated Farmers Dairy Industry Chair Andrew Hoggard.
“Price volatility within a season is extremely difficult to address because production is based on a biological system, so having certainty about the price you will receive at the end of the season will remove a lot of pressure for dairy farmers.”
Mr Hoggard urged dairy farmers who were interested in the NZX milk price and futures options contracts to get professional advice.
“While it will provide farmers with certainty around price there’s always someone on the downside when futures are traded.
"It will be important for farmers to get sound independent advice so that they're aware of how this approach changes their risk profile and what this might look like for them at the end of the season.”
TheCattleSite News Desk