NEW ZEALAND – Pressure is piling on Kiwi dairy farmers going into the 2015/16 season in the shape of further drops in world dairy prices and the possibility of Fonterra’s lowest farmgate price in thirteen years.
Tuesday’s Global Dairy Trade closed a further 9.3 per cent lower, closely followed by today’s Fonterra milk price of NZ$3.85 per kilogram of milk solids.
Fonterra’s announcement, expected to pull $2.5 billion out of rural economies, is the lowest price since 2002, although advisers have stressed that costs have risen by over $1/kgMS since then and that farms are in twice as much debt.
According to DairyNZ, the Waikato area stands to lose out on $692 million and Canterbury on $494 million.
The 2015/16 season will be “very difficult”, Fonterra chairman John Wilson said this week.
He blamed a continued imbalance in the global milk supplies for “unsustainably low” milk prices, which farmers around the world are “increasingly grappling”.
The added complication of Russian trade restrictions, causing particular upset in Europe, has led to more dairy products being moved to intervention.
Agriculture Commissioner Phil Hogan extended Private Storage Aid for SMP and Butter, in a week seeing more supply chain disruption from protesting dairy farmers aggravated by processor price cuts.
The extension will run up to March 2016.
French farmer protests last month drove politicians to call on bank and supermarket cooperation.
Low prices across pork and dairy sectors resulted in transport blockades last month, resulting in the government negotiating deals with French banks to restructure farm lending and debt interest.
Farm groups in New Zealand have also agreed “a few initiatives” with banks to support farmers if and when help is needed.
DairyNZ, Fonterra and Federated Farmers have met with banking representatives this week, in a bid to ensure sufficient support for facility conversions for sharemilkers.
DairyNZ said: “We need sharemilkers in our industry – they are our future – we have to wrap support around everybody working on farms”.
By: Michael Priestley, News Team Editor
Source: The Dairy Site