Fonterra's $6.50 farmgate milk price forecast for next season is likely to lead to an increase in farmer confidence and bring forward farm spending and investment, economists say.
Fonterra is expected to announce its opening milk price forecast for 2017-18 next week and economists are picking a conservative figure in the low-$6 range.
A farm-gate milk price based on a shorter duration would help align New Zealand supply sooner with global market prices, reducing volatility, ASB senior rural economist Nathan Penny believes.