Max Baxter.
The rural economy is about to get a shot in the arm.
The region’s dairy farmers will receive an extra $65 million if Fonterra delivers on its promise of a record payout for this season – although it is only about $1 above breakeven for the average farmer.
The dairy co-operative, New Zealand’s largest company, raised the midpoint of the 2024/25 season forecast farmgate milk price to $9.50 per kilogramme of milk solids from $9 in November. Open Country Dairy and the Tatua Dairy Co-operative typically match Fonterra or pay a little more.
It’s a substantial jump from last season’s $7.83 and $8.33 in the 2022/23 season.
The forecast extra 50 cents a kilogram puts an extra $71,000 in the pocket of the average Ōtorohanga district dairy farmer producing 142,357 kilograms of milks solids, or $23.6 million when multiplied across the district’s 331 dairy farms. If $9.50 is achieved the average Ōtorohanga dairy farmer will take home $1.3 million, worth a collective $448 million to the district.
The forecast puts an extra $84,000 in the pocket of the average Waitomo district dairy farmer producing 168,452 kilograms of milks solids, or $4.9 million when multiplied across the district’s 59 dairy farms. If $9.50 is achieved the average Waitomo dairy farmer will take home $1.6 million, worth a collective $94 million to the district.
Ōtorohanga dairy, kiwifruit and forestry farmer Duncan Coull, former chair of the Fonterra Shareholders’ Council, welcomed the news.
“A lot of farms are in consolidation mode,” he said. “We are coming off a very high inflationary period.”
He thought it would be six months before the benefits started to flow through rural communities. The future is looking pretty good.”
Ōtorohanga mayor and dairy farmer Max Baxter spoke to The News fresh from paying bills.
“It gives us a chance to breathe,” Baxter said.
“We have faced incredible price increases across the board, absolutely debilitating,” Baxter said
“The extra 50 cents is making a lot of guys profitable,” said Waikato Federated Farmers executive member and dairy farmer John Bluett.
Most farmers would use the extra cash to pay their debts in the short term.
“There’s a lot of debt sitting there from the last couple of years, service industry credit, and it’s given them the chance to pay it off.”
In the long term, farmer will use the extra cash to start new projects.
“Guys will be in a good position,” he said.
He advised farmers to save a portion of the payout in a six-month term deposit to make the most of the bonus.
While 10 cents more than the record $9.40 payout, Bluett said the end of season payout would need to be closer to $11 to have a similar effect considering rising costs.
