'Bleak day' as Fonterra slash forecast farmgate milk price

Fonterra CEO Miles Hurrell said the revised forecast Farmgate Milk Price range reflects ongoing reduced import demand for whole milk powder from Greater China.

Fonterra has slashed its forecast farmgate milk price.

In a blow to dairy farmers Fonterra has reduced its 2023/24 season forecast Farmgate Milk Price significantly.

Host of The Country radio show and rural commentator Jamie McKay described it as “a bleak day for provincial New Zealand”.

“I think the loser out of this will be the New Zealand economy,” McKay said on Newstalk ZB.

He said service areas such as Invercargill could take a hit.

“There is no way to sugar-coat this… It is a grim story.”

Although he pointed out long-term there was “light at the end of the tunnel”.

“I’m hopeful once we get into the 2024 calendar year things will improve.”

McKay said it was a message to the Government that they need to get rid of some their “woke ideology” that has led to a lot of regulation and let them get on with farming.

Fonterra has cut its forecast farmgate milk price range to $6.25 - $7.75 per kg of milk solids, with a midpoint of $7 per kg.

Many had a forecast of $7.50 with $8 suggested as a breakeven point for farmers.

Fonterra CEO Miles Hurrell said the revised forecast Farmgate Milk Price range reflects ongoing reduced import demand for whole milk powder from Greater China.  

“When we announced our opening 2023/24 season forecast Farmgate Milk Price in May, we noted it reflected an expectation that China’s import demand for whole milk powder would lift over the medium-term. 

“Since then, overall Global Dairy Trade (GDT) whole milk powder prices have fallen by 12%, and China’s share of whole milk powder volumes on GDT events has tracked below average levels. 

“This reflects a current surplus of fresh milk in China, resulting in elevated levels of local production of whole milk powder, and reducing near-term whole milk powder import requirements. 

“The medium to long term outlook for dairy, in particular New Zealand dairy, looks positive with milk production from key exporting regions flat compared to last year,” Hurrell said.