A Federated Farmers leader has responded to last week’s story in The News where farmers were encouraged to lobby for better milk prices.
Jarrod Godfrey
Waipā accountant Jarrod Godfrey said Fonterra’s opening milk price forecast for the 2025 season, in real terms, was not materially different to what was paid to farmers 20 years ago.
Cambridge Federated Farmers chair Richard Myers said the costs of operating businesses need to be scrutinised.
“We need to put more pressure on the Fonterra business to improve performance. Fonterra has a work force of about 23,000 employees, three times as many farmer shareholders. When did Fonterra last trim the work force?
“Also, we have a board of directors dominated by farmer shareholders six to three. How about a board of four each with the chair the best person for the job?”
He said another important area where farmers had most control was over operating their own farm business.
“One of the major important farm budget items that can be controlled is imported feed. Growing grass is the farmer’s cheapest feed option. Every time imported feed is used there is substitution of grass for a more expensive feed.
“Home grown feed harvested is a major driver of farm profitability. There is real potential for improving pasture management on farm by measuring accurately average pasture cover, grass growth rates, drawing up feed budgets and diligence with feed allocation. We pay for Dairy NZ and there is much helpful information available from this source.”
Earlier story
6 June 2024
A Waipā accountant is telling farmers to advocate for a “material” improvement in milk prices from Fonterra.
Chartered Accountant Jarrod Godfrey, Associate Partner at Findex Waikato, says Fonterra’s opening milk price forecast for the 2025 season, in real terms, is not materially different to what was paid to farmers 20 years ago.
Jarrod Godfrey
The forecast started at $8 a kilo of milk solids and left the 2024 season forecast unchanged at $7.80.
“Most dairy farmers will be putting together their budget for 2025, and it probably doesn’t show much joy for the next 12 months, even with an $8 milk price,” Godfrey said.
“In real terms, milk prices have not changed much over the past 20 years, and combined with farm expense inflation and recent high interest rates, budgets will be looking fairly tight for the next 12 months.”
“Real” milk prices have not changed much I two decades, Jarrod Godfrey says.
He said the break-even point for an average 124ha Waipa dairy farm, peak milking 370 will be $8.20.
He encouraged farmers to put together a budget for the upcoming season, so plans could be made to navigate the tighter cash flow periods.
