By David Hargreaves
The freefall of global dairy prices is showing no signs of stopping.
Prices sank another 9.3% on the GlobalDairyTrade auction overnight, reaching the lowest ever on the GDT and settling at levels last seen in the 2002-03 period.
It was the 10th consecutive fall in prices at the auction.
The key whole milk powder price slumped a further 10.3% and is now down a staggering 31.7% across the last three auctions.
At the moment Fonterra is forecasting a milk price for its farmers this season of $5.25 per kilogram of milk solids.
However, the Fonterra board is due to meet on Friday and reconsider that forecast. It was widely expected in the marketplace that the new forecast price would be set at around $4.00 to $4.25, but the further dire auction result overnight must now suggest the forecast may well be under $4.
Economists at the country's largest dairy farm lender ANZ are now picking a price for the season in the "mid-$3" range. Westpac economists have trimmed their forecast too.
"As bad as this result was, it was just as bad as we were bracing for," Westpac senior economist Michael Gordon said. "Hence, we can confirm a further downgrade to our forecast of the farmgate milk price this season to $3.70 per kilo of milksolids."
On a slightly brighter note though, Westpac's released its first prediction of a likely milk price for NEXT season and come up with a figure of $5.20, which would be an improvement, though down on the $5.80 average in the past 10 years.
And ASB economists remain of the view that the market is now close to the bottom. They are sticking with forecast milk price for the current season of $4.50.
Fonterra's forecast payout for the season recently ended was $4.40, which compared with a hefty $8.40 figure just a year ago.
Two seasons of low - and for many farmers, below breakeven - returns are expected to put many under pressure. Farm prices are likely seen as falling.
ANZ senior economist Mark Smith said the latest auction result was "about as bad as it could have been".
"Since the March 4 auction the cumulative fall in average dairy prices has been a whopping 46%, taking the level of dairy prices below GFC troughs and to around 12 year lows. A look at the components showed broad-based falls, led by anhydrous milk fat (-11.7% to USD 2,253), skim milk powder (-14.4% to USD 1,419 per MT), and with whole milk powder prices (WMP) down 10.3% to USD 1,590 per MT – less than half of March 4 contract prices," Smith said.
The volumes sold at the auction were significantly up, with 46,527 metric tonnes sold, the highest since last October, he said.
"Given that the next seven auctions account for a significant chunk of annual (GDT) WMP sales, it doesn’t take a rocket scientist to work out that auction prices of the next two months will weigh heavily on the final milk price outcome for the 2015/16 season.
"The current $5.25/kg MS forecast may have looked reasonable a few months ago, but developments move quickly in commodity markets and we now expect a milk price in the mid 3’s/kg MS. Fonterra is due to provide an update of their milk price forecast this Friday, and signs are not looking good with the likelihood of a second successive season of low dairy incomes looking to be an inevitability.
"Coming on the back of the 3.7% fall in non-dairy commodity prices – revealed in yesterday’s ANZ commodity price index – this suggests a large pending terms of trade hit. Monetary conditions need to be more accommodative and the [Reserve Bank] are likely to follow through with a further rate cut in September. The [New Zealand dollar] is following commodity prices downwards, but the sharp fall in dairy prices suggests more adjustment is needed."
The Kiwi dollar didn't have much immediate reaction to the latest auction results but has subsequently started to slide again and is now down about 1 cent in the past 24 hours against the American currency. A short time ago it was worth about US65.2c.
One thing to watch for after the Fonterra board meeting on Friday will be whether the co-operative says anything more about product supply strategies in the face of what is clearly an over-supplied market. Fonterra signalled to the market last week that it would be putting about 9% less WMP on the GDT auction in the next 12 months.
Fonterra said the key factors that influenced its GDT forecasts were: seasonal changes or weather events impacting its milk supply; production, storage or supply chain constraints; anticipated customer demand from GDT and non-GDT sales channels; and differences in relative returns of products.
"In response to current conditions in the global dairy markets, Fonterra has modified its product mix that will see a volume shift away from whole milk powder and into our other products in the portfolio. In addition, our key customers have responded to global conditions by re-shaping their purchasing profile, altering our forecast off-take profile. On the supply side we have anticipated that our farmers may reduce volumes in response to the current low price signals," Fonterra said.
Farmers facing up to the second consecutive season of poor returns will be looking to what Fonterra announces, presumably late on Friday, after its board meeting. Already the dairy co-operative has said it will axe 523 jobs, intended to save it about $55-$60 million a year. But farmers will want to know what Fonterra can do for them right now.
Westpac's views on next year
In Westpac's latest Fortnightly Agri Update the Westpac economists lay out their thinking for where dairy prices will go further into the future.
"We’re assuming a price of $5.20/kg, which would be an improvement on current conditions, but still below the average of $5.80/kg over the past ten years. Of course, there’s still a huge degree of uncertainty around how dairy prices perform over the current season, and that goes doubly so for next season," senior economist Michael Gordon said.
"So what’s the case for expecting an improvement in prices next season? Once again, we return to our checklist of the four factors needed to rebalance the international dairy market: a moderation in milk production, a stabilisation in Chinese demand, a reduction in China’s stockpiles, and an end to Russia’s trade ban.
"All four of these factors are still weighing on prices at the moment, and it’s overly simplistic to pick on just one factor. Nevertheless, in terms of what has changed recently, we would highlight the first of these factors: specifically, European dairy farmers have cranked up their milk production significantly following the removal of the quota system in April. While the intention to do so has been known for some time, the surge in production has come at just the wrong time. It’s well recognised that current milk prices are below production costs for much of Europe, and the latest GDT prices imply that an increasing share of Europe’s milk production will be sold into ‘intervention’, effectively taking it off the international market and perhaps helping to establish a floor for prices elsewhere.
"Notably, overseas industry bodies such as the USDA are forecasting global milk production to grow by only about 1% this year. That implies a strong belief that dairy farmers around the world will respond to price signals and slow down over the second half of this year. If that view is correct, it would go quite some way towards realigning supply with demand. That realignment was in fact already under way, until the recent surge in European production."
ASB's views on the current year
ASB rural economist Nathan Penny said the falls in dairy prices "are sentiment-driven and thus are likely to be in part temporary".
"Over the past month or so, dairy supply has not changed materially – to the contrary, supply has tightened gradually and the risks are that it tightens further. Sure the risks are that demand is weaker, particularly in the key dairy market China as officials there struggle to stabilise the Chinese sharemarket and boost economic growth.
"Also, demand from the Middle East may be weak on low oil prices. But the market has largely shrugged off supply developments and risks, or at least the magnitude of the recent price falls don’t, in our view, reflect the balance of these demand and supply risks.
"First up, Fonterra’s move to switch production away from WMP into higher-priced products over the next 12 months plus a lower production outlook should together put upward pressure on overall prices in time. The 12-month forecast of WMP auction volumes, for example, has been lowered by around 9%.
"Secondly, risks are rising of an el niño weather pattern developing and causing drought in eastern parts of NZ. This is on top of our expectation that farmers respond to this season’s low milk price with less production. For example, we expect NZ production this season to be on par with last season, if not fall.
"With the above in mind, we stick with our season end 2015/16 milk price forecast $4.50/kg for now, while acknowledging the risks remain skewed down. As for Friday’s Fonterra announcement and Season end milk price forecasts and at this early juncture in the season, we expect Fonterra to downgrade its forecast to circa $4.00/kg, with risks that it goes lower than that. In addition, the dairy weakness reaffirms our view that the RBNZ will cut the OCR to 2.5% this year," Penny said.
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85 Comments
Live by the cow, die by the cow.
Thank goodness we have the rocket surgeons in government ready and waiting to further put all our milk in the one bucket with the TPPA.
For example; what use is an export software industry when it can be strangled with TPPA software patents for the sake of the glorious dairy industry!
Yes , and we have known for at least 10 years that we should be diversifying our economy away from reliance on a single commodity .
We need to move into the smart economy and financial services , starting with merging our stock exchange with Australia giving us a 12 hour trading day .
Then we need to set up Auckland as a HEADQUARTERS centre for multinational banks such as Barclays , Stanchart and HSBC by offering concessionary tax rates for foreign banks . We have all the ingredients , stable economic framework , robust governance and oversight and low corruption rating .
The we need to look at value add low-labour intensity manufacturing to use our surplus electricity
"we need to set up Auckland as a HEADQUARTERS centre for multinational banks such as Barclays , Stanchart and HSBC by offering concessionary tax rates for foreign banks ."
That's a lovely idea but is simply a pipe dream.
London kind of has a 200 year head start on us in that regard and has the competitive advantage of being located in the same city as the headquarters of major multinational corporations and the cross roads of major population bases (Europe and US).
Despite the (laughable) grandiose claims by some that Auckland is now a global city (as some kind of justification for the outlandish property prices that defy fundamentals) - Auckland is merely a child in the wilderness who thinks it knows it all. The best Auckland could hope to be in the global financial services sector is a sophisticated back-office hub for these banks, operating in a time-zone that is difficult to service between the US and Asia.
marcf28 - Which one? It doesn't own it's current HQ in Princes St - it leases it, - as it will lease the new HQ in the Viaduct.Or are you referring to manufacturing sites???
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=111…
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=108…
CO, did you see this link to the USA wine industry, graphs in cases
http://wineindustryinsight.com/?p=63417
Yes Aj, I did. Would be interesting to see the same info graphed for NZ. Pleased we aren't in the commercial wine business. How's it looking for your grapes this year? Will you have a contract?
Are you in the part of Cornwall were the farmers are buying up supermarket milk and handing it out for free, as a protest against low prices?
Grapes are getting pruned as we face the unkown. Is it the things we know we don't know, the things we don't know we don't know, or the things we just don't want to know? ZIRP has really screwed up a lot of industries.
Yes we are in a part of Cornwall where the farmers are buying their milk back, must go and get some free stuff. The sheep industry has turned ugly here too.
The good news in my daughter is out of her wheelchair after two months, having progressed to crutches, we are not breathing all the smoke into our lungs in Nth California and suffering the dreaded heat wave which lasts for months. The UK health service has been a positive experience.
CO, it's the immigration from Nth Africa thats been talked about most. I follow an Aussie biker and his blog as he bikes around the world look at his latest posting.
So had a really interesting walk through down town Luassanne this afternoon. Heading down the main drag one couldn't help but notice the amount of black people all around, I don't know don't go judging me that's what colour they were and I mean they totally out numbered the white gringo type, maybe it's just this neighbourhood who knows but it really stood out with groups of people just loitering around in the parks on the corners etc.
On one end of the street there were about a dozen cops searching in the bushes and every other little nook and cranny for something. It was interesting so asked one of them and apparently they were looking for drugs that get stashed all around. With that I kept walking and I'm no detective but I know trouble when I see it and I could see two guys on the phone one one each side of the road strolling in different directions looking at each other talking away looking back up the road at the cops and making gestures it was obvious they were in cohoots and up to no good and it had something to do with the cops. It was all a bit surreal really, you could tell it wasn't good what was happening but oh well let's go get a burger and let them worry about it.
Grab a bite to eat and start heading back to the hotel and here's a group of black guys on the corner having an argument ok nothing unusual about that till the punches started getting thrown. An elderly white couple walk past trying not to get involved but they got a dirty look off the guys and I was actually a little worried for them. I was about 50 metres away as the trouble started escalating and was considering crossing the road myself but fortunately the combatants headed up a small road where the blows continued. As I walked past one of them got thrown through a pizza shop window and it shattered with a big bang which had people coming out of the restaurant up the road to see what had happened. The guy that got thrown the window came bouncing back throwing punches the other guys more a wrestler with his height advantage both landing some good blows though. By this time I'm standing on the corner with about 15 other people watching this fight go on and on.
Eventually one of them had enough and hightailed it out of there and I kept going on my merry way. A few minutes later the cops sirens came a whaling aling but the boys were long gone. Welcome to the wild west oh hang on no this is Luasanne.
I'm leaving here tomorrow and heading off towards the Furka Grimsel Susten and Nurfensen or whatever it is passes so that will be fun looking forward to maybe catching up with the boys, we will see if our paths cross.
Hey Sheldon. A lot of those guys were probably African refugees. Europe is starting to get overrun with them.
Yeah they are I talked to quite a few of them a lot from Mali and others Senegal, one told me he had moved from France with his young family cause it had become to dangerous in France where they first were. I don't know if I already blogged it but the British Prime minister got in trouble for calling the immigrants a "swarm" I wouldn't refer to it as a swarm it's more a tidal wave. Europe is changing VERY rapidly and it's been real eye opener to see the changes first hand with a few years apart. For all the Euros following along see you in Uruguay in a few years :-)
I actually just hope all of Europe come together to sort this issue out, it was only 70 years ago a certain someone got jack of a group of people and sorted the issue out in not ideal ways, could that happen again surely not but one thing is for sure, we are just stupid humans in the wash up.
That 250k loss can't include interest payments, or drawings. It sounds like a false economy anyway because your only income would be the difference between the price of a yearling and the price of a mixed aged cow, both of which are now priced at beef prices, not dairy. You'd be lucky to make much more then 200k out of the deal, and you still need to feed the heifers and get them in calf. I doubt the banks will look too kindly on that either, as they have a fetish for revenues, not profits. Higher revenues is good, profits are a secondary consideration.
do you understand the genetic investment over time for a good herd, and that a dairy heifer is two full year of _costs_ before it _might_ make it's first milking. And of those making it through their first lactation a good number aren't kept for a second (low performance, temperment, didn't get in calf).
and you cant just "drop labour" by NZ law.
you cant kill the herd and not milk the herd for a season or two.
On the third season where do you get your genetic superior milking cows from? Buying them pregnant costs $2500-3000 each _IF_ you can get them, and usually in small numbers.
Even average quality producing cows pregnant will cost $1500 - 1800. that was one diversification I was using, selling off a range of the younger but genetic better part of my herd. But they're limited in supply because the seller has to keep them alive too.
So even if you got rid of the herd, you'd still have to pay to raise and feed and maintain the calves and yearlings and R2 for your herd. And then you'd have an entirely new herd - very very few people have what it takes to break in a whole new herd, even a small one.
Right now you can't sell off your best animals (no buyers). you could put them all (or most) in the works, and take the $600 the works is offering for that $2500 cow. Perhaps lease them out, or take some lease/loan animals on (but that leaves one party looking to build a herd). but you're still left with a lot of the costs and no production.
Interest still has to be paid, as do rates. You would be able to retrench all your staff, as a dry stock farm, vs milking. Bit of a bugger if you had good staff, you will be unlikely to see them again in two or three years.
But what income is there to pay your own wages? (and aforementioned interest and rates).
That 250k yeary loss for one or two years, that you're lightly throwing around... how long do you think will it take to recover that (with interest) when retained dairy farm earnings are around 2 - 6% ?
And then lets talk sharemilkers who own mortgaged herds.....
"A crisis always takes longer to arrive than you think, and then arrived faster than you thought" (Bastiat)
I could follow that quotation up with any number of observations that relate to our economy/political structure/social structure, but what we don't know is.... 'is it arriving or has it arrived?". Let's hope that 'it has arrived' because if its still on the way then.....God defend New Zealand....because no one else will...
Do not be surprised if this ends in a full blown currency crisis at some point down the road. The storm clouds aren't just gathering, they are here. The boost from the CChurch rebuild is starting to fade (see yesterday's Westpac report) and a major El Nino event will cause more agricultural stress. Interesting to see what today's unemployment figures reveal - what happens to migration once unemployment starts to move up? 2016 will be pretty stressful here in Godzone.
Bloomberg with the headline
NZD - Westpac says it expects Fonterra to cut 15/16 milk payout to $NZ3.70
Follows more declines in dairy prices overnight at the GlobalDairyTrade (yeah, that's how they spell it ... spacesbetweenwordsareso5minutesago, you know?) auction.
Note - the Fonterra board meeting is scheduled for August 7, revisions to the payout are expected at this meeting (current payout figure is at $5.25/mskg)
If you're bullish NZD, please go and buy a milkshake, or a few million of them:
http://news.forexlive.com/!/nzd---westpac-says-it-expects-fonterra-to-c…?
Those farmers who bought farms priced on $8.00 payouts are going to in severe hardship. I wonder how the banks will react. It is really sad... we have ourselves to blame too though, putting so much of our effort into farming and I recall those who handed out abuse when I suggested farming wasn't the bees knees (they would proclaim everyone needs food so how can you go wrong)
Which is the easy part, consider the domino/chain effect of income and debt,
a) That the farm was bought converted assuming $6+ a kilo and now $5 a kilo looks somewhat more realistic. That suggests farms are 20%? over-valued alone, then add in the property bubble and teh assumption of a tax free gain on selling and that might take off another 15%. So a 1/3rd drop in value seems not unrealistic? So a bank sells a $10million arm for $7million, the farmer is wiped out and the bank takes a hit on on asset value which feeds into its leverage. How many instances of a 30% loss can the banks sustain before being insolvent?
b) All the effects on other businesses in rural NZ that have debt based on the assumption of similar payouts? debt now cannot be serviced?
c) rural housing values? mortgages thereof? The above mentioned businesses have owners in expensive houses and lifestyles who's income now is under severe stress, oppsie.
d) Council rates? taking to the few farmers I know in Marlborough their rates are based on a blanket high grape payout, just how do dairy and indeed many farmers continue to pay such high rates demanded? Councils have debt, how is that continued to be serviced? put up rates? ouch in a already depressed rural NZ.
Out of curiosity, if a farmer goes bankrupt leaving rate debt who pays that? the new owner "the bank"? the subsequent owner? If the rates bills are still high going forward, this depresses the asset prices still further.
e) At what point does a bank bailout occur? 10% bank losses? 20%? then the Govn has the choice of bailing out a stuffed bank or doing an OBR.
f) The bank loses and investors in the above debt are pension funds etc and when they lose much of it then what?
So to me when this really goes south it will go a long way south, the only Q is is it today? or 5years away? or 10? it will be inside 20.
Steven
a) farms where close to break even before, due to high costs (%8 pa inflation) farms would have to half and then I still wouldn't touch one, then what are their shares worth?
b) already fertiliser firms, rural supply firms and those that lend against livestock are hurting and have cashflow problems.
c) Rural communities are hurting already
d) Rates will be an issue, they take them out of the sale price, no escape. Rates need to drop to 1995 levels but they won't, exacerbating the problem. Councils are a huge part of the problem, i don't have high expectations.
e) Banks, does the government have the money, would destroy our rating expect higher rates.
f) Pension funds are screwed either way, often only there to pay fees to managers. Probably get some form of bailout so we can limp along a little longer. Deflation is hard to get used to after such along period of credit expansion. Oh, sheep and forestry are screwed too.
Got this from a friend this morning.
>>>
Probably worse than it looks. Cheddar had 10% and 15% drops for
contracts 2 and 3 so not sure how their index shows a rise.
These are the lowest gDT prices ever. Essentially $0.70 per Kg MS less
than the last auction.
Again quite a few Contract 2 and 3 prices not published (not enough
offers to get off the starting price i.e. not all product offered sold).
Volume? Maybe 20% less than typical rather than the 30% less of the last
few months.
If its any comfort surfisup, no one bought their farms "priced on $8 pay-outs". If they did they deserve not to have the farm, but in reality no one did, and besides the banks certainly weren't using $8 forecast pay-outs in their analysis of the merits of the lending (hence why the banks won't be pulling the rug from under the vast majority either)
Apparently they were Grant. I remember a young fellow on the news about 16 months ago talking about how hard it was finding a farm to buy. He kept getting gazzumped. Eventually he found a property and psid 6 mill for it. Milking 400 cows. He was budgeting on a low of $7/kg though so he was being very conservative. I clesrly remember thinking at the time the dude was crazy. And all the other dudes that had gazzumped him to buy at higher prices musta been plain mental. They all probably would agree with me today.
Well Belle, sad to hear if that was the case as that sounds completely outside of what criteria that the banks had been using, although there was a period where a couple were being aggressive - any bank that rapidly grows market share has done it on price and/or lower credit standards. I don't think thats too wide spread but maybe its a little more so than I thought.
I think people get to a point where they are ready to buy. All the ducks are sitting in a row. So when the banks back them as well, the common sense that should kick in goes missing in a euphoric sense of optimism. There must be a euphoric virus in Auckland at the mo. It has spread to Tauranga. My mum has just put her house on the market. Ist day 4 offers. One was over 35% above its market value of last year.
Fonterra tried to manipulate it for a second time. In January lowering the offering caused buyers to push the price only once, then they realised how obvious it was. This time they didn't even fall for it once. I here John Wilson is in Waimana at 1:30, hope he's got security.
Will Fonterra be lost or has it already happened, takes me back to my time in Canada. We don't learn much from history.
http://www.dennisgruending.ca/2012/04/viterra-kills-sask-wheat-pool-leg…
Remember the good old days
http://www.nbr.co.nz/article/fonterras-40million-ferrier-revealed-dw-12…
Jumped to that link - There is a comment there from someone sayng "Why don't farmers realise that it would cost a lot less to put stuff in the provinces"
Why don't people who say things like that realise that _farmers_ don't run Fonterra. Fonterra is a processing _corporation_, a marketing _corporation_. It doesn't listen to farmers at all, in fact it pretty much does completely the opposite to what farmers want or think is prudent (although it is good seeing Fonterra offer debt relief instead of equity deals; its very marginally safer)
Some of the big boy's must be sweating.
http://www.stuff.co.nz/business/farming/dairy/70297932/Dairy-Holdings-s…
Great link AJ.... yes... Viterra IS Fonterra...
AND... Ferrier is Canadian..?? ( there u go... call me racist )
It is mind boggling that he got paid $40 million over 8 yrs....
I would have been happy to do the same damage for far less...
Maybe he used the Viterra story as his playbook..????
Everything balances out. The NZD drops but house prices will increase as it's cheaper for foreigners to buy. As for inflation...bwhahaha. Deflation is in our future for the next 3-4 years. Cheap milk, cheese, fuel, etc. Good times ahead for people in the know.
Oh and before I forget, I hope everyone bought some USD a few months back. 100k should have been your minimum purchase. More reasons to smile. Also please tell me that you bought US shares will the NZD was strong. Like I said, it's pay day for the people who didn't fall for the doom propaganda.
Nobody decided to give the knife to IT development, or international financial centres in Auckland, in favour of Dairy. It was not a conscious decision. If IT people or financial companies could have made it big in New Zealand they would have. Fact is New Zealand is good at dairy and good at farming with some natural advantages. IT and finance not so much. Maybe somebody will find the angle some day but they haven't yet in any big way.
Acknowledging of course that some in dairy might have got ahead of themselves by moving into higher cost production
Regards that higher marginal cost production, listen here from 4 minutes and 30 seconds to Charlie Petersen explain that banks are telling dairy farmers: "Don't constrain your production below its potential."
http://www.radionz.co.nz/national/programmes/morningreport/audio/201765…
So despite world dairy supply exceeding demand, and average NZ costs of production being higher than payout, banks are advising farmers to borrow more rather than cut their high marginal cost production.
We definitely have rocket surgeons in charge of at least our finance and dairying.
Stunning statement! And it's not hard to see why dairy prices are where they are. I think this is modern corporate thinking, "borrow money for nothing and run your business at a loss". Not much hope for small business dairy farmers trying to compete with thinking like this.
that's because with the move from co-op (processor and farm) to company (processor divorced from production) it was inevitable that was going to happen. farmers and sharemilkers were very vocal on the matter, but processor knew better.
This is because the processor could always pass on losses by dropping price.
And the farmers and farmer representatives who got to vote and represent all had fully paid farms (ie _hobbies_) and never operated in a commercial manner. (and wouldn't listen to the commercial types, saying "you just have too much debt" or "I have many farms and you don't so I'm an expert...ignoring that one can't personally work more than one farm)
on the models they use, the more you produce the less expenses get assigned to each unit of production, therefore the more you make the cheaper it is, and so the more profitable you must be.
Most of the computers, models, and tools are based round a circular logic. How to get more profit? reduce expenses? how do we reduce expenses? Fixed costs are $X, so the higher production the lower $x needs to be allotted per unit :. to reduce expenses produce more. What does it cost to produce Y volume? How can we reduce that cost? Produce more. How do we make enough profit to pay for this expansion? Produce more. Therefore everything says just keep producing more until it gets cheap enough to be profitable.
except it doesn't work - but the people running the computers, and the people writing the software, and the people making the algorithms are different people in different industries (with no skin in the game).
The are break points, hard limits, diminishing returns, market saturations, extra logistics, all that are ignored by that model.
True, KH, nobody knifed IT development, etc, but there was indeed a conscious decision - as far as our politicians can be called conscious - to bet the house on dairying. The strategies to double agricultural exports, to go for irrigation wherever they could chance it, to sack Environment Canterbury, to rip up fresh water standards, etc (this could be a long list), are all part of this one-eyed drive. And no organisation has more clout in Wellington than Fonterra. The government merely followed what it was told would be a sure thing.
I beg to differ. Software patents are coming with the TPPA. That will be the death knell for the niche software industry we have in New Zealand. Risks of frivolous litigation are way too high for any small or medium sized company. These patents will be inflicted to win concessions for dairy.
New Zealand is good at things other than dairy and New Zealand has the talent. We should pull out all the stops to diversify away from land and resource intensive dairy to higher value exports like software.
Lets say we bottom out at Milk solid around 3.36/kg approx 60% drop from peak of 8.40/kg. This is based on US dollar strength to 58 cents on the Kiwi at the end of 2015 and US dollar 52 cent to the kiwi end of 2016. Also on the assumption that the oil price will fall between $20 -$30 per barrel. In this scenario can we manage at these levels?
Yes Donkers, hard to see "win win" by sending over 11,000 dairy cows to China as espoused by Fonterra director Ian Farrelly. Sell the produce, not the assets that generate it.
https://www.tvnz.co.nz/one-news/business/live-cattle-shipment-boosts-fo…
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