Sharechat Logo

Fonterra to cut milk prices by month end

Wednesday 11th January 2012

Text too small?

Fonterra Cooperative, the world’s biggest dairy exporter, will cut the wholesale price of milk to retailers at the end of the month.

The cut comes after the dairy cooperative put a freeze on local consumer prices and absorbed cost increases in the face of a public backlash over rising retail milk prices. Fonterra expects the lower wholesale milk price will be passed through to consumers, though that’s a decision for retailers, a spokesman told BusinessDesk in an emailed statement.

“Ultimately it is the retailer that sets the retail price for milk for New Zealand consumers,” the spokesman said. “Fonterra Brands New Zealand has notified retailers that there will be a reduction in wholesale milk price effective 30 January.”

Still, Fonterra is unsure whether the decline in wholesale milk prices will last as international prices are poised to increase.

“We will review it like any other product,” the spokesman said.

Global dairy prices have been at elevated levels for the past two years, underpinning a record pay-out to farmers last year.

Still, the price of dairy products sold on Fonterra online trading platform has declined in the past two auctions. The latest GlobalDairyTrade event on Jan 4 showed a 0.7 percent decline in the GDT-TWI Price Index to an average winning price of US$3,654 a metric tonne. 

That represents a 24 percent decrease in the GDT-TWI Price Index from when prices were at a three-year high in March 2011 - an average price of US$4,826 a metric tonne, which was the highest average since the auctions began in July 2008.

Whole milk powder has fallen 22 percent from a peak high in March 2011where it had an average price of US$4,573 a metric tonne to US$3,554 at the most recent sale.

New Zealand sold $11.67 billion of dairy products, including milk powder, butter, cheese, casein and caseinates, in the 12 months ended Nov. 30, according to government figures. That accounts for about a quarter of the nation’s $47.25 billion of annual exported goods.

Fonterra exports about 95 percent of its production.


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

APRA, RBNZ give ANZ Bank a headache over capital
Lack of fuel competition may be costing $400m annually - ComCom
UPDATE: Mercury earnings fall less than expected on geothermal offset
Napier Port jumps 12% on NZX debut following oversubscribed public offer
Moody's sees pressure on NZ banks' profitability
Competition watchdog proposes breaking wholesale stranglehold on petrol supply
FIRST CUT: Mercury earnings fall less than expected on geothermal offset
Comvita says KPMG's audit delays reporting of annual results
20th August 2019 Morning Report
NZ dollar drifts lower as greenback gains; focus on Jackson Hole

IRG See IRG research reports