-
Related
Farmers say the average Fonterra farmer will pocket an extra $55,000 from the boost in payout the giant co-operative announced on Tuesday.
And economists say regional economies will benefit from about $750 million of extra income from a 12% lift in the payout.
Fonterra boosted its forecast 2010 milk payment, by 60c to $4.60, but cut back its forecast value return - the profit it pays to farmers - by 5c to 50c/kg milksolids.
The net increase brings the projected payout to $5.10 - 55c higher than the previous forecast and only 10c/kg lower than last season - and Fonterra credited an improved outlook for global commodity prices. It had been forecasting $4.55 this season - the lowest in three years.
Federated Farmers dairy chairman Lachlan McKenzie said the average extra $55,000 gross payment would make up for the $53,000 loss that the average dairy farmer had last year.
"People ... think the average farmer is getting a half-a-million dollar income but they have to pay all the wages and bills out of that," McKenzie said.
And federation president Don Nicolson said farmers were still finding it tough, with tight cashflows at the start of the current season and some "serious belt-tightening".
"This will give our farmers a bit of relief and some extra flexibility to get the best out of their farms this year."
But what was needed was for the New Zealand dollar exchange rates to come off the boil.
"The economists are saying that the economy is bubbling along OK but it could be so much better with a lower currency," he said.
The level of the New Zealand dollar, which has been trading over US70c recently, remained a concern but this had been factored into the revised 2009-2010 forecast.
Fonterra chief executive Andrew Ferrier said the strong increases in prices for whole milkpowder at recent online auctions showed "a broad strengthening of demand and robust recovery in international dairy prices."
Prices have lifted 55% in the two latest monthly online auctions.
"We're seeing ... the firming of a trend, with a more positive sentiment and stronger demand, producing better pricing across the board," he said.
Whole milkpowder prices had led the way, with the prices for other dairy commodities now all improving.
Fonterra will on Wednesday announce its financial results for 2008/09 and confirm its payout for the season.
Westpac economist Doug Steel said the lift in projected payout would lift gross domestic product by 0.4% - potentially potentially lifting the country from recession.
The country's second-quarter current account figures on Tuesday produced its the first quarterly surplus since March 2003 - a $124 million surplus.
But Steel said the revised forecast would take pressure off the cashflow of farmers, including some with high levels of debt.
