Lyndon Strang contemplates Fonterra's impending forecast
payout announcements on his Five Forks farm. Photo by Sally
Five Forks dairy farmer Lyndon Strang isn't expecting any
surprises today when the dairy co-operative updates its
forecast 2013-14 season payout.
A cut of between about 25c and 30c from the present $8.65kg
ms farmgate milk price has been predicted by economists,
while a conservative opening forecast for the 2014-15 season,
around the $7kg ms mark, has also been suggested.
Mr Strang, who is also dairy chairman of North Otago
Federated Farmers, said the 2013-14 payout was still going to
be a record, and even a $7 forecast for next season was
''potentially still another good payout''.
He urged farmers to continue to watch expenses, saying it was
''so easy'' in a high payout year to take the focus off
Mr Strang and his wife Jane will be milking 400 cows next
season on their property inland from Oamaru, having milked
350 this season.
They aimed to be self-contained, wintering their own cows and
growing their own supplementary feed.
Mr Strang, due to start his eighth season in the industry,
spent eight years in the navy, travelling around the world,
before joining logistics company DHL, ending up as national
He and his wife's desire to have their own business saw him
join the dairy industry, initially working for Mrs Strang's
The couple then went sharemilking and the opportunity arose
to buy the farm.
He had no regrets about the career change, and while there
were lots of challenges, they were not insurmountable, he
''We've just got to acknowledge them and deal with them and,
if we can, then the potential's huge,'' he said.
He believed there did not have to be a ''huge growth phase''
to have a good, sound industry.
Fonterra had to keep adding value to its products and seeking
The co-operative's diversified portfolio and strategy to keep
adding value should protect New Zealand's dairy industry when
powder prices were dropping, he said.
Today's announcement was likely to keep pressure on the New
Zealand dollar, CMC Markets New Zealand sales trader Garry
The market was expecting Fonterra to reduce its forecast for
the present season from $8.65 to about $8.40 and to
potentially drop the opening level for next season to about
With dairy accounting for 30% of New Zealand's merchandise
exports, a figure below $7 should keep the dollar under
pressure, Mr Dean said.
In late March, Fonterra confirmed a forecast cash payout for
the 2013-14 season at $8.75, comprising a farmgate milk price
of $8.65kg ms and an estimated dividend of 10c.
ANZ was expecting up to 30c to be cut from this year's milk
price, and an opening forecast of somewhere between $6.50 and
$7, as milk powder prices were still falling and the dollar
was still high.
It then expected Fonterra to revise up its forecast as the
season progressed to the low to mid $7kg range due to better
Chinese import demand was likely to pick up, while the dollar
was expected to slowly depreciate over the second half of the
season, the bank said.
BNZ economist Doug Steel has predicted a new season forecast
of somewhere around the $7 mark, while Westpac chief
economist Dominick Stephens believed it would be around