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This is what has been feared. Prices for milk solids have halved from what they were a year ago taking them below the price of production.
Farmers and government will resort to hopium saying that the prices will recover. They won't - not in a hurry. All commodities - except those in short supply because of climate change - are crashing.
Farmers will be forced off the and.There will be farmer suicides as a result of this.
John Key's self-proclaimed "Rockstar economy" is in tatters
Fonterra
slashes farmgate milk price to $3.85
Fonterra
has cut its forecast farmgate milk price payout to dairy farmers this
season to $3.85, down from $5.25 forecast earlier in the year.
7
August, 2015 15.43 NZT
Fonterra
has announced that the forecast total payout available to farmers in
the 2015/16 season will be $4.25-$4.35.
That
comprises a forecast Farmgate Milk Price of $3.85 per kilogram of
milksolids and forecast earnings per share in the range of 40 - 50
cents per share.
Fonterra
has also announced Fonterra Co-operative Support of an additional 50
cents per shared-up kilogram of milksolids to support farmers this
season.
Chairman
John Wilson said the Farmgate Milk Price forecast has been reduced
from $5.25 kgMS to $3.85 per kgMS due to the continued significant
imbalance in the global dairy market between weak demand and surplus
supply.
"This
imbalance and the challenge of lower prices continuing for longer
than anticipated is a global issue, which dairy farmers around the
world are increasingly grappling with," Mr Wilson said.
"Current
prices are unsustainably low and we are seeing them beginning to
impact production levels globally. We have confidence that prices
will recover over the course of the season. However, it will be a
tough season for our farmers.
"The
range of possible scenarios is contributing to the uncertainty we are
seeing today.
"We
know the global dairy market will improve. The hard thing to call at
the moment is exactly when and how quickly," said Mr Wilson.
See the full announcement here:
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