By Kaye Albyt
Fonterra has confirmed farmers will receive $10.16 per kilo of milk solids for the season just past. Photo: RNZ / Rebekah Parsons-King
The national president of Federated Farmers believes the latest record farmgate milk payout is possibly the new norm for farmers.
Fonterra has confirmed farmers will receive $10.16 per kilo of milk solids for the season just past.
The dairy co-operative has also recorded a full-year net profit of just over a billion dollars, a slight drop on its previous result.
Wayne Langford believes farmers can be optimistic about future farmgate returns.
"I wouldn't say the new norm is $10 but certainly the bottom end is probably more like $7.50-$8 and the top end maybe even up higher than $10, up to the $11 or $12. That's certainly what I'd like to see and hope is what is coming. Certainly a lot of hard work is needed to achieve that though, that's not going to be easy."
Langford said Fonterra's result is great news for rural communities and the country's economy as a whole.
"This was a fantastic result for farmers and will be very well received."
Federated Farmers president Wayne Langford. Photo: RNZ/Marika Khabazi
Langford said Fonterra has achieved a massive shift in performance over the past four to five years.
He said it's fantastic to see the work that's been put in and the focus and attention that's gone in to achieving the result. He also congratulated Fonterra which he said, because it is farmer-owned, the profits will end up back in the rural community for the good of everyone.
"What's key here, is that with the strong payout last year as well, a lot of overdrafts and debt was repaid and with some of these returns coming in this year, there will be a lot more to spend out in those communities. I certainly encourage those who are working with farmers or selling to farmers - the builders and contractors, car salesmen and tractor salesmen, if there was a time for them to make hay, it is now."
However, Langford acknowledged that other New Zealanders are feeling the pain at the supermarket checkout when it comes to dairy prices.
He said farmers also feel that pain when they go grocery shopping and while higher farm production costs account for some of the increases, supermarkets should be looking at their price margins, especially when it comes to butter.
"I am also a farmer and a dad to three boys who need a fair bit of food, so I'm conscious of the price of butter and what that looks like in the supermarket. While we look at it as farmers, we need to look at it around what supermarkets are charging and the margins that are being put on as well. So we have seen butter prices globally come back around 15 percent over the last couple of dairy trades and we may see some easing of the butter prices in the future."
Langford said more supermarket competition could also bring down butter prices.
Dairy farmer welcomes record payout after challenging season
A Waikato dairy farmer said a record farmgate milk payout was making up for a tougher period for the sector.
Tihoi farmer Richard Webber told Morning Report the results were pleasing.
"It's come at a a great time of year where farmers have been very busy with calving, putting in the big hours. To have results like this it's very pleasing and it's good for New Zealand as a whole," he said.
Webber said the positive result follows a challenging season when he navigated through a drought.
"There was a lot of costs associated with that drought and we were effectively 15 percent down in production and a significant amount of feed brought in to achieve the production that we did," he said.
"In some ways, the financial result offsets that lower production so we're lucky to hang in the fight again this year."
Although the positive result was well received, it needed to be kept in perspective, Webber said.
"Dairy farming is very cyclical. We've had lots of bad times and so you've got to remember that when we have these good times.
"We're all putting our businesses into good shape so that they're sustainable.
"At the end of the day, we're all in business to make a dollar. If you're in business for any other reason, then you're really just joking yourself."
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