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A change in fortune for dairy farmers is already having an impact on the New Zealand economy.
Fonterra announced yesterday http://tvnz.co.nz/business-news/fonterra-lifts-milk-price-forecast-3494443 for the current season to $6.10 per kilogram of milksolids and an advance to its payment schedule which will put cash in farmers' pockets sooner than expected.
The co-operative also maintained its forecast range for a distributable profit of 40-50 cents per share.
Westpac chief economist Brendan O'Donovan says for the full season, industry wide income will be about $1.8 billion better than last season.
He says we are already seeing part of the flow-on to the consumer.
O'Donovan says when commodity prices go up so does the currency and collectively that makes consumers better off as their money goes further.
He says we are starting to see the export-led recovery not only in dairy, but commodity prices in general.
Fonterra chairman Sir Henry van der Heyden said continued strength in global dairy prices, with demand growth beginning to outstrip supply, had driven the board's decision to increase the forecast milk price.
The increase is the first since the forecast milk price was raised by $1.10 last November.
