Fonterra’s Auction System Destroys Milk Powder Price

Fonterra launched its new whole milk powder internet auction system in July claiming it would provide an objective market price and would be to the benefit of New Zealand’s dairy farmers. Unfortunately it appears to have had just the opposite effect, because prices at auction have fallen by up to US$1700 over the period.

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Hard to see where $150 will come from for a few years

Although the T150 call from Bruce Wills, Federated Farmers Meat and Fibre Chairman, is notable for its optimism more than its reality, you have to admire the sentiment behind the campaign. He knows it will be a hard target to achieve within the five year timeframe, but he says it’s necessary to instil confidence in the prospects for sheep farming among sheep farmers, otherwise more and more will get out, whether into dairy farming, dairy grazing or by selling out.

 

Bruce Wills sees improved returns coming from both supply chain efficiencies and increasing the percentage share of the retail value of a lamb. These comments, while taking a positive approach to a seemingly insoluble problem, won’t actually make any difference on their own without concerted action by everybody in the industry to process and market lamb a lot more effectively than has been the case in the past.

What is right size is $64,000 question

The interim profits announced by PPCS and AFFCO, the only two meat companies required to publish results at the half year, represent a significant improvement on last year, contrasting strongly with farmers’ returns.

 

This underlines the inevitable reality of the meat industry which can be summarised in a nutshell: when there’s plenty of grass, farmers have choice and can feed their livestock until they’re ready to go to the works or saleyards, whichever is paying the best money, but in drought conditions most can’t get stock to the works fast enough, regardless of the price.