Farmers can repay all or part of the loan at any time and no security is required over their shares or any other assets.
An expected uplift in dairy prices in the overnight GlobalDairyTrade auction won’t change the fact Kiwi dairy farmers are the lowliest paid.
According to the dairy company, these challenging conditions include the low forecast Farmgate Milk Price for next season, which is now set at $3.85 kgMS.
Last month Fonterra said forecast total payout available to farmers in the 2015/16 season will be $4.25-$4.35 – well down on the $8.40 farmers received two seasons ago.
RenCas index up 6.3%, average price US$5,779/MT. “But a reduction in global milk production must occur to allow for a sustained recovery in dairy commodity prices”, Ms Kilsby said. Murray Goulburn boss Gary Helou responded that it had a different business to Fonterra, given 55 percent of its business was in the domestic market.
It reported an an average selling price of US$2,226 per tonne of product – up from US$1,974 on August 18.
“The big difference here is a lack of subsidies so they have no-one to go crying to anymore”, she said.
But Westpac senior economist Michael Gordon said they were “hesitant” about assuming further substantial price gains in coming auctions, as the milk supply situation remained unclear.
Butter milk powder led the way with a gain in price of 30%, while skim milk powder (+11.7%), anhydrous milk fat (+11.7%) and butter (+8.1%) all made strong improvements.
AHDB Dairy’s report said the result was another step in the right direction. Moreover, markets are yet to be convinced that NZ production is slowing. ASB Bank’s Nathan Penny said dairy sentiment had turned but that the focus had now turned to production. Prices of whole-milk powder, the most important commodity for New Zealand, gained 12.1% at the auction to sell for $2,078 per metric tonne.
Fonterra chairman John Wilson said Fonterra was well placed to help its farmers because of its underlying strength.