Fonterra, the world’s largest dairy exporter, has recently lowered its forecast milk price for the third time in a year. This news has come as a disappointment to farmers who rely on dairy prices for their livelihood. With the global market for dairy products still recovering from the effects of Covid-19, the dairy industry is facing uncertain times. In this article, we will explore the reasons behind Fonterra’s decision and what it means for the future of the dairy industry in Ireland and beyond.
Fonterra has once again reduced its expected farmgate milk price for the 2022/23 period due to a decrease in dairy demand from China and the northern hemisphere’s peak milk production. The New Zealand co-op has confirmed that the forecasted milk price range for the season will now be between NZ$8.00 and NZ$8.60 per kg of milk solids, with a midpoint of NZ$8.30, down from the previous prediction of NZ$8.20–8.80 per kg of milk solids, with a midpoint of NZ$8.50. Fonterra CEO, Miles Hurrell, stated that this decision was made because short-term demand for their dairy products, which is used to set milk prices, has been softer than anticipated. Hurrell expressed that they recognize the impact this will have on farmers who are already struggling with increased input costs, and therefore, they have adjusted the advance rate schedule to get cash to farmers as early as possible. He also noted that they are positive about the outlook for the next season and will announce the opening 2023/24 forecast in May.
As Fonterra faces another setback in their forecasted milk prices, it highlights the volatile nature of the dairy industry. Farmers will be keeping a close eye on the market as they make decisions for their business. As always, it is important for them to consider long-term sustainability and resilience in the face of any challenges. We can only hope that the industry stabilises and farmers are able to continue to produce high-quality milk while maintaining their livelihoods.
