Federated Farmers urged dairy farmers to keep their budgets tight. Photo / Christine Cornege.
Federated Farmers urged dairy farmers to keep their budgets tight. Photo / Christine Cornege.
Farmers will be disappointed with Fonterra's downwardly revised forecast dividend for the current season, especially given the low farm gate milk price, says Fonterra Shareholders' Council chairman Ian Brown. "That Fonterra has maintained the 2014/15 forecast farmgate milk price at $4.70 per kg is a positive given the volatility experiencedthroughout the season to date, however shareholders had an expectation that their co-operative would have delivered a higher dividend," Brown said. "Shareholders rightfully want to see the strategy provide a return on their investment, especially given the low milk price environment farmers are currently experiencing," he said.
The 25-member council represents the interests of Fonterra farmers to the Fonterra board.
Federated Farmers urged dairy farmers to keep their budgets tight.
"Farmers were hoping for some good news, but [the] announcement enforces the need to maintain their frugal mindset," said Andrew Hoggard, Federated Farmers dairy chairman. "What will be the biggest disappointment to farmers ... is Fonterra's drop in its dividend."
Industry body DairyNZ is advising farmers to focus on strong cashflow management as they look ahead to the 2015-16 season. Many would dip into the red this spring.
"For many, they may not pop back up into the black for some time," said Dairy NZ chief executive Tim Mackle.
DairyNZ has calculated that the average farmer needs $5.40 per kg/MS to cover farm working expenses, interest and rent this season.
"The 2015-16 season coming poses an even bigger challenge - when lower retrospective payments start to hit in July and August this year and many more farmers have to look at putting cost-effective measures in place to avoid escalating their debt," he said.
DairyNZ's data shows milk production for the 2014-15 season so far, from all farmers across all dairy companies, is tracking 3 per cent ahead of last year.
