Boost as Southland rural folks' Christmas equivalent arrives
Dairy farming is said to account for nearly 20% of the jobs in Southland and more than $230m of wages paid by the sector.
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This is about the time Southland rural folk resemble a kid bracing for Christmas.
And what’s better is it comes on the back of some positive news for many in the dairy sector.
The three-day Southern Field Days 2024 event will start on Wednesday at Waimumu, Gore. It lures many rural folks off the farm to mingle, check out the latest in rural machinery and technology, and take in several events.
It’s been four years since the last Southern Field Days was held considering the 2022 bi-annual event was cancelled on the back of Covid.
Dairy farmers may now head to the 2024 event with an added spring in their step following Fonterra’s announcement on Monday that it has lifted its 2023/24 season forecast Farmgate Milk Price.
The midpoint has lifted by 30 cents to $7.80 per kg of milk solids, up from $7.50 per kg.
The forecast range for the season increases to $7.30-$8.30 per kgMS, up from $7.00 - $8.00 per kgMS.
Dairy farming is a significant piece of Southland’s economy.
A report released last year commissioned by DairyNZ and the Dairy Companies Association highlighted just that.
According to the report, put together by Sense Partners, the Southland dairy sector has 2300 farming jobs and 770 processing jobs.
Dairy accounts for nearly 20% of the jobs in Southland and more than $230m of wages paid by the sector, says the report.
It represents 13.8% of regional GDP, contributing $953m, making it the largest sector in Southland.
Any lift in milk prices is significant for Southland.
Fonterra CEO Miles Hurrell said the lift in the Farmgate Milk Price comes off the back of five strong Global Dairy Trade events.
“Recently, we’ve seen a lift in demand, primarily from the Middle East and South East Asia, for our reference commodity products and this has been reflected in GDT prices.
“Overall GDT prices are up 10% since our last Farmgate Milk Price update in December, with whole milk powder prices up 11.5% over the same period.
“Looking ahead, the potential impact of geopolitical instability and supply chain disruption on demand from key importing regions remains uncertain.
“We can navigate these dynamics thanks to our scale and our diversification across markets, which provides us with optionality. We are also well placed to continue to get the Co-op’s product to customers through our partnership with Kotahi,” Hurrell said.
Fonterra’s forecast earnings guidance for FY24 of 50-65 cents per share remains unchanged.
Fonterra is one of the top six dairy companies in the world by turnover. It’s owned by over 11,000 New Zealand dairy farmers who supply them with more than 14 billion litres of milk each year.
While Fonterra’s forecast Farmgate Milk Price increase was a positive for the sector in New Zealand.
At the same time, Synlait Milk revealed to the NZX that it expects to report a first half loss of $17-$21 million in March, driven by increased financing and operating costs.
Reduced ingredient and advanced nutrition margins would also contribute to the shortfall, it said.
Synlait’s first half 2023 profit was $4.8m.
The milk processor, which counts infant formula marketer a2 Milk as its biggest customer, has a $130 million debt repayment due on March 28.
The half-year loss range was based on Synlait’s initial consolidated result, which was subject to further review and may be subject to further adjustments as the company prepared its half-year financial statements for release on March 25, it said.
“The HY24 result remains subject to review procedures by Synlait’s auditor, and the range excludes any additional adjustments, including accruals, provisions, and impairments, which are still being assessed,” the company said in a statement to the NZX.