Dairy farmers are bemoaning lost revenue. Photo by Sally
The high value of the New Zealand dollar has cost
Fonterra's farmer-shareholders about $1 billion in lost
revenue, Federated Farmers dairy spokesman Willy Leferink says.
"Increased production from our farms - not just dairy I need
to add - helped to offset the high dollar. Yet the dollar's
strength came with a $1 billion opportunity-cost for
"That might have some calling for the new Reserve Bank
governor's head, but we cannot blame him. The dollar is being
kept high by what our Government is spending. It is something
like $8 million every single hour, so why don't we start
there?" he asked.
Mr Leferink was commenting on Fonterra's annual profit result
of $1.03 billion for the year ending June.
At the same time, Fonterra's payout was down 19% to $6.40 per
kg of milk solids and came with a warning it would drop to
$5.25 next year.
However, Mr Leferink may have some time to wait before the
dollar drops to a level satisfactory for Fonterra
stakeholders. The ASB Kiwi Dollar Barometer shows that on
average, businesses expect the dollar to peak at US85.6c
around the middle of next year.
That is higher than the ASB forecast of a peak of US84c in
Businesses have a much lower expectation of the long-term
average of the dollar, reckoning the kiwi to average US63.2c
over the next 10 years. In contrast, the kiwi averaged US69c
in the past 10 years and ASB expected the average over the
next 10 years to be higher than that.
The Barometer tracks exporters and exporters and their
exposure to foreign exchange risk by surveying businesses
with annual turnovers of at least $1 million.