Talking to the Herald at Fieldays – Wilson said Fonterra’s issues with low profitability had largely been brought on by big increases in milk production – which had required the co-op to invest more in ‘stainless steel’ to process the extra milk.
Fonterra last month said its farm gate milk price would be $4.40 a kg of milksolids for the season just passed and $5.25 a kg for the season ahead.
DairyNZ estimates producers need $5.70 a kilo to break even.
Wilson said fundamentals in the sector were solid and that Fonterra remained in a strong position.
‘We are aware of how anxious our farmers are at the moment but we have a huge amount of confidence in the dairy sector globally.
That has not changed’
The current oversupply was a result of high prices in 2013/14, which encouraged farmers around the world to produce more.
‘Most of our farmers understand what is happening’ he said. ‘They are disappointed and it was such a surprise to see prices come back so quickly – but they have seen what has happened on global dairy markets’.
(ed:..and then he continues to bang on and on – studiously ignoring the elephant trumpeting away in the corner of the room..
..does the head of fonterra not know this markey glut is predicted (the economist) to last for at least the next five years..?
and that the huge increase in production from many other countries/players in the market – make an end to this glut unforseeable..
yet these fonterra executives just seem to be closing their eyes – crossing their fingers – and wishing it to get better..
and for this they deserve/get a special irrational-optimism-award..
and hearing this serious/serial-bullshit from fonterra – must make any famer/shareholder with half a brain – very very nervous..
and justifiably so..as they are being fed complete and utter bullshit – by these deliriously-optimistic fonterra executives..)