New Zealand price lowest in eight years

Fonterra recently lowered their projected pay-out to farmers for the 2014/15 season ending 31 May 2015 by another 10 cents to NZ$4,40 per kilogram milk solids – the lowest in eight years. Adding the expected dividend of between 20 and 30 cents per kilogram of solids, farmers will receive a cash pay-out of $4,60 – $4,70 per kilogram milk solids. This is equal to between R2,75/litre and R2,81/litre based on South African average solids content*. Fonterra issued its 2015/16 farm-gate milk price forecast at $5,25 per kilogram milk solids (R3,14/litre on an SA basis). This is 13% higher than the projected final pay out for 2014/15.

The lower priced milk during the past season has already resulted in lower production in New Zealand. During the first quarter of 2015, New Zealand production decreased by 1,9% compared to the same period last year.* New Zealand farmers are paid per kilogram of butterfat and protein. New Zealand prices are converted to South African prices, based on the South African average of 3,8% butterfat and 3,3% protein. An exchange rate of R8,80 per New Zealand dollar as on 28 May 2015 was used for the conversion. For example: NZ$ 4,60 X 7 kg solids/100 kg milk * R8,80/NZ$/103 kg/litre milk = R2,75/litre