The high Kiwi dollar has cost Fonterra's farmer-shareholders around a billion dollars in lost revenue. Yet its result, in a week of job losses, should remind everyone the exceptional opportunities New Zealand has with food.
"Given trading conditions, these results are a good send off for Sir Henry van der Heyden and Theo Spierings' first anniversary as Chief Executive," said Willy Leferink, Federated Farmers Dairy Chairperson.
"The farmgate milk price of $6.08 per kilogram of milksolids (kg/MS), while down on last year, is up three cents on what was forecast in May. With the dividend it means a final payout of $6.40 kg/MS and that makes it the sixth best payout in the past 20 seasons.
"The three extra cents for last season is a small but welcome bonus but the 32 cent dividend will be a little on the disappointing side for some farmer-shareholders.
"Because the payout trajectory was well telegraphed, the eyes of most farmers are on the tough season we're now in. Instead of the $6.08 kg/MS milk price announced today, we are staring down the barrel of $5.25.
"There is cause for some optimism as GlobalDairyTrade has strongly rebounded since the new season's start. Until Fonterra's prospectus is released due to Trading Among Farmers, there will be no further payout revision announcements. We are watching this space.
"Against this backdrop is an ugly international trading climate. We were all reminded of it this week by job losses outside of the primary industries.
"Every Kiwi ought to be grateful last summer's dismal holiday weather became a farming bonanza. Sadly, this goldilocks weather was also shared by our major competitors.
"This helps to explain why production surged 11 percent to 620,000 metric tonnes, yet only translated into a modest two percent increase in sales.
"Increased production from our farms, not just dairy I need to add, helped to offset the high dollar. Yet the dollar's strength came with a one billion dollar opportunity-cost for Fonterra's farmer-shareholders.
"That might have some calling for the new Reserve Bank Governor's head but we cannot blame him. The dollar is being kept high by what our government is spending. It is something like $8 million every single hour so why don't we start there?
"I also know there'll be much comment on the payout to Andrew Ferrier. Farmers do not have an issue so long as the recipient delivers and I think Ferrier did. It is a shame we don't have ten more executives like him as it means we'd have ten more companies like Fonterra.
"While great to hear Theo Spierings highlight increased milk supply from New Zealand, Federated Farmers is alarmed by regional council policy developments. These developments could constrict all forms of farming, not just dairy.
"If you constrain farming you constrain jobs and that only ends up constraining the environment as well," Willy Leferink concluded.