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Milk is turning to liquid gold for New Zealand
farmers.
On Friday Fonterra told farmers how much they are likely to be paid
for this season's milk.
Thanks to climbing prices for cheese and butter and a fall in the
Kiwi dollar it is a record pay cheque of $6.40 for every kilo they
produce.
It is the hightest forecast payout ever.
"If the dollar goes up, that means we receive less NZ dollars for our product overseas. That means the payout tends to go down," says Doug Steel, Westpac economist.
For the average farmer this will mean around $700,000 coming in through the farm gate - about $200,000 more than last year.
It is good news in the countryside but there is a pay-off for the rest of the country too because however the windfall is spent, farmers are going to pump billions into the Kiwi economy.
"That's an injection into the Kiwi economy of about $2.5 billion. That makes everyone richer in New Zealand," says Steel.
Fonterra's chairman, Henry Van der Heyden, has enjoyed being the bearer of good tidings.
"We've been through some difficult times. Over the last few years farmers' cash flows have been quite light on farms, so it's just nice to be able to deliver some good news," says Van der Heyden.
But some farmers are not planning big spend-ups.
"With the extra costs we are facing now, that's going to chew up a fair bit. On top of that there is going to be taxes come out of that, so our disposable income at the end is maybe not going to be as significant as what people may portray," says dairy farmer Steve Nelson.
Paul Sharp, a farm consultant, adds, "A fair bit of it is going to be sopped up with increasing prices across the board and hopefully some development on the farm to make it more productive."
One thing is for sure, their investments will all be with one
thing in mind - to get more out of this cash cow.
