It may have been a ''hellishly tough month'' for Fonterra but
the co-operative's forecast milk price underlines that the
fundamentals of the New Zealand dairy industry remain strong,
Federated Farmers dairy chairman Willy Leferink says.
Last week, the co-operative revised its 2013-14 season
forecast to $7.80, up 30c from the previous forecast late
New Zealanders should ''rejoice'' that the immediate
financial damage from the recall and market access issues
would not dent the economy, Mr Leferink said.
''With an eye to the future, we've got to accept that we
cannot afford a repeat of this month's problems, but right
now, this confidence in the dairy industry is a huge relief.
''From the Chicago Mercantile Exchange to GlobalDairyTrade,
the markets have delivered their own verdict.
''However, we still have a lot of bridge-building to do and a
heck of a lot of things to learn but learn them we will. We
will be back better because we have to be,'' he said.
The prices for New Zealand's dairy exports reflected the
reality that the amount of surplus milk for global export
remained ''wafer thin''.
Mr Leferink pointed out that it was still a forecast and it
was also some way off from being ''in the bank'', so farmers
needed to budget conservatively to reduce debt that had built
up over last season's drought.
Prof William Bailey, from the department of agriculture at
Western Illinois University, described Fonterra's decision to
revise its forecast, just one month after its previous
announcement, as ''surprising''.
While the increase would provide a boost to confidence in the
New Zealand dairy sector, a different type of risk was ''on
the edge of the radar'', he said.
Markets in the Middle East, including Iran, an important
Fonterra customer, could be affected by the impact of any
outside military intervention in Syria, he said.
Fonterra Shareholders Council chairman Ian Brown urged
farmers to continue to show prudence in their financial
planning, given the volatility of the market.
Westland Milk Products has revised its 2013-14 forecast
payout to a range of $7.60-8 kg ms with a new advance rate of
$5 kg ms.
Federated Farmers West Coast dairy chairman Richard Reynolds
said farmers on the coast were ''counting down'' to September
20 when they got the advance.
''After the rare West Coast drought this year, we've got more
than an overdraft to start clearing.
''Even if the forecast sticks, it will still be a whole year
after that before we get the full payment.
"As I am often reminded, there's a heck of lot of water to go
under the bridge, not to mention four seasons,'' he said.