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A Record Dairy Payout – Farwell Gift from the Board

Greetings Readers

It is all good news for dairy producers today. However the excellent payout it has been achieved, the confirmed prospects of a $5.00 payout is most welcome

The limited information made available suggests that good international prices, strong demand and relatively low exchange rates for the New Zealand dollar causing total board revenue to rise from $7.7 billion to nearly $10 billion.

Initial reports suggest that only five percent or $500 million of the $10 billion of total board sales came from exchange rate fluctuations. Warren Larson put this sum as $500 million of the $2.2 billion lift in sales between the two seasons, which creates a slightly confused picture at to what the real situation on how the board manages its forward exchange.

If Mr Larson’s summary is correct and the board has bought forward a high percentage of the exchange needed for this coming season at the rates existing for the past six months, then there is substantial exchange protection built into the coming seasons returns.

With exchange effects lifted from the payout equation focus shift to international prices and demand which are currently maintaining a steady position.

Two good payout seasons in succession will certainly change the face of dairying. But the warning by John Roadley, that it would be a tragedy for the industry if farmers saw the excellent result as an indication that the proposed mega-merger was not necessary indicates some unease in the leaders camp as to what the rank and file are thinking.

Certainly there are some of the ‘if it aint broke don’t fix it’ brigade present in the ranks of dairy farmers. The longer the state of merger indecision continues, the more likely it is that this group will grow. The risk lies with the industries leadership procrastination, not with shareholders whose opinions may change are left in an unattended vacuum.

One swallow a summer does not make.

Good farming

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