Fonterra, the world’s largest exporter of dairy products, has announced a reduction in its milk price forecast, putting immense pressure on farmers in New Zealand. The cooperative has cut its farmgate milk price estimate from NZ$7.15 to NZ$6.80 per kilogram of milk solids, citing weaker global demand due to the pandemic as the primary reason. The reduced forecast has left farmers struggling to make ends meet, with many calling for additional support from the government. In this article, we will explore the impact of Fonterra’s decision on the dairy industry in New Zealand and the steps being taken to assist farmers in navigating these difficult times.
Fonterra has reduced its farmgate milk payment forecast for this season due to weaker global demand. The co-operative has revised its forecast for the 2022/23 season to $8 to $8.60 per kilogram of milk solids, down from its previous forecast of $8.20 to $8.80 per kgMS. The lower milk price is likely to create further pressure on dairy farmers who are already facing rising costs this season. Fonterra’s milk payment sets the benchmark for other companies and is closely observed by industry analysts. To aid cash flow, the co-operative will adjust its advance rate schedule to pay farmers earlier. However, Fonterra plans to announce a positive outlook for next season and will publish its forecast for the 2023/24 farmgate milk price next month. Dairy products form New Zealand’s largest commodity export.
The dairy industry has been a backbone of agricultural communities for centuries. But as Fonterra announces another reduction in milk prices, the farmers are feeling the squeeze. The industry has been through ups and downs before, but this current scenario is unprecedented. While Fonterra tries to balance its global demand and supply chain, the farmers are struggling to make ends meet. With many small-scale farms facing closure, the impact on rural economies is undeniable. It’s a tough time for the dairy industry, and we can only hope that the situation improves soon.
