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Will the Fonterra payout drop further?

November 19, 2008
Payout to drop again?

Update: 10% payout drop announced

Fonterra have scheduled a TV broadcast to announce an updated payout forecast on friday. Given the current economic climate and recent SanLu scandal we can only assume that the payout forecast is headed further south.

In fact the payout is likely to drop a significant amount as Fonterra have called this press release outside of their normal payout updates - something they generally don't do unless the forecast is to change by more than 30 cents.

The 2008/2009 payout forecast has already been reduced to $6.60/kg of milk solids from earlier in the year so a 30 cent reduction would mean a payout drop of about 4.5%. There are rumours on blogs and the media however that the forecast may drop to $6.00 or lower - i.e. a 10% drop in revenues.

Though still high by historical standards, a $6/kgMS payout would signal significantly reduced earnings for us and other farmers, and completely changes the basis for our decision to give it a go on the farm for a year. It looks like I might be heading back to an office job at the end of the farming season if dairy prices continue this trend... assuming there are still office jobs to go back to in this period of global recession!

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Broken fence to the neighbour's property
An early start on Christmas morning
Cooking dulce de leche
Milk payout drops to $6
Payout to drop further?
Grass cut for silage in front of Mount Taranaki
Sore fingers
Fertiliser truck driving up a grassy hill
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