Fon­terra told: fess up

Matamata Chronicle - - What’s On - AN­DREA FOX

Fon­terra should tell farm­ers as soon as it is con­fi­dent the milk price fore­cast will have to change, says the com­pany’s share­holder coun­cil chair­man.

There’s grow­ing spec­u­la­tion the big co-op­er­a­tive will have to down­grade its milk price fore­cast of $4.60kg milk­solids af­ter the se­cond Global Dairy Trade prod­uct auc­tion of the new year posted an­other fall in the av­er­age price achieved.

Fon­terra chair­man John Wil­son said in an email to farmer-share­hold­ers af­ter this week’s 1.4 per cent GDT price fall: ‘‘I know you will be con­sid­er­ing what this may mean for the far­m­gate milk price.

‘‘We will up­date the milk price fore­cast to farm­ers if a re­vi­sion is re­quired based on fore­casts for the bal­ance of the fi­nan­cial year,’’ Wil­son said.

Coun­cil chair­man Dun­can Coull was cau­tious about ac­knowl­edg­ing pres­sure on the fore­cast but said if there was any doubt in the com­pany about the $4.60kg guid­ance he wanted it com­mu­ni­cated to farm­ers.

‘‘I’d like that com­mu­ni­cated as soon as they have con­fi­dence that there is a change in that num­ber,’’ he said.

‘‘I think most farm­ers, as hard as it may be, have con­di­tioned them­selves to a lower milk price this year – we started at $3.85. But it’s a wor­ry­ing sign see­ing GDT lev­els where they are cur­rently at.’’

Fon­terra, with div­i­dend­bear­ing units listed on the New Zealand and Aus­tralian stock ex­changes, also has dis­clo­sure obli­ga­tions to mar­ket in­vestors.

Be­fore this week’s GDT re­sult, Fon­terra’s chief fi­nan­cial of­fi­cer Lukas Par­avicini said New Zealand’s big­gest milk pro­ces­sor was due to next re­view its fore­cast in March. It was re­quired by in­dus­try leg­is­la­tion to re­view its milk price fore­cast quar­terly, he said. The last up­date was in De­cem­ber.

The GDT price of milk price de­ter­miner, whole milk pow­der, fell 0.5 per cent to US$2188/tonne last week and an­other main­stay ex­port sta­ple, skim milk pow­der was down 3.2 per cent to US$1835.

The com­pany has said the price of whole milk pow­der would have to rise to US$3000 by mid-au­tumn to main­tain the fore­cast price.

The se­cond big­gest pro­ces­sor, Open Coun­try Dairy, this week down­graded its milk price guid­ance 30c to $4-4.30/kg.

Fon­terra chair­man John Wil­son told farmer-share­hold­ers: ‘‘We will up­date the milk price fore­cast to farm­ers if a re­vi­sion is re­quired.’’

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