Applications are open for Fonterra farmers to lock in a price
for a percentage of their milk for the 2014-15 season.
The guaranteed milk price (GMP) scheme has been further
developed since it was piloted in the 2013-14 season.
It would give farmers more flexibility to help manage the
effects of commodity price volatility and give greater income
certainty, the co-operative said.
There were two opportunities in the season to secure a GMP on
60 million kg ms: up to 40 million kg ms was available in
June, and up to 20 million kg ms in December.
There was a new approach to determine each GMP and allocate
the available volume.
Farmers had the option of offering a percentage of their
estimated milk production across one or more of five prices:
$6.60, $6.70, $6.80, $6.90 and $7, director of milk supply
Steve Murphy said.
Last season's pilot attracted such a high level of support
Fonterra had to scale offers back to 40% of the original
applications and many farmers were disappointed.
In the event of oversubscription this season, applications
would not be scaled back pro-rata across all volumes of
Instead, farmers could weigh up what milksolids they were
willing to offer at one or more of the five prices.
Once applications closed, the total kg ms offered by all
applicants at each price would be totalled.
Allocations would be made based on the prices at which
milksolids were offered from the lowest price up and the GMP
would be determined at the highest price at which the total
quantity of milksolids offered reached the specified limit.
All accepted applications would receive the same GMP, the
June GMP or the December GMP.
However, depending on the total milksolids offered at each
prices, some farmers might not get all or any of the volume
For applications made in June, farmers could apply to fix a
GMP for between 10% and 75% of their estimated milk
production for the season.
They had until June 20 to apply..
Fonterra's latest global dairy update showed milk collection
across New Zealand for the 12 months to May 31 reached 1.6
billion kg ms, 8% higher than the 2012-13 season.
Weather in early May returned to more normal autumn
conditions and production growth was strong, reflecting both
improved conditions and the impact of last season's drought.
North Island collection in May reached 27 million kg ms, 40%
ahead of May last season, while South Island collection
reached 34 million kg ms, 14% ahead of May last season.