Kiwi dairy farmers face grim future

WELLINGTON – The future is looking grim for dairy farmers in New Zealand, with Fonterra drastically cutting its milk price forecast for the coming season.

The forecast is down from $5.25 a kilogram of milk solids to $3.85.

Fonterra blamed the weakened global dairy market and low demand for dairy products as the reason behind the announcement.

The chairman of Fonterra in New Zealand, John Wilson, also announced a support fund to assist their struggling suppliers.

“This imbalance and the challenge of lower prices continuing for longer than anticipated is a global issue, which dairy farmers around the world are increasingly grappling with,” he said, in a statement.

“Current prices are unsustainably low and we are seeing them beginning to impact production levels globally.

“We have confidence that prices will recover over the course of the season. However, it will be a tough season for our farmers.

“The range of possible scenarios is contributing to the uncertainty we are seeing today.

“We know the global dairy market will improve. The hard thing to call at the moment is exactly when and how quickly.”

The company has announced its own support fund to assist farmers, offering them interest-free loans.

The Fonterra Co-operative Support fund will allow its suppliers to apply for an additional 50 cents per shared-up milk solids for production for the season.

This payment is interest free for two years, and will be paid back when the milk prices rises above $6.00 per kilogram of milk solids.

New Zealand is the world’s biggest exporter of dairy products.

Its farmers are more exposed to the troubled world dairy market than Australian farmers, who mainly supply for the domestic market.