Milk powder rises for first time in Fonterra online auctions

By Paul McBeth

Wednesday 4th March 2009

The price of milk powder rose 16.6% on Fonterra Cooperative Group's controversial online auctions, the first recorded increase on the trading system.

The average price of milk powder jumped to US$2,158 per metric ton from US$1,851 last month. The world's largest exporter of dairy products has been resisting calls for a review of its GlobalDairyTrade system by dairy farmers.

Executives and directors of the cooperative who met with Federated Farmers dairy representatives last week weren't willing to consider evaluating the auctions, which have been cited by the EU in defending its export subsidies. Australian farmers accused the online auctions of wiping 40% from dairy prices in the latter half of last year.

Before the latest increase, prices had slumped 58% since the introduction of the auctions in July last year. Fonterra revised its forecast payout for the 2008-2009 season down 90 cents to $5.10 per kilogram, 35% lower than the record $7.90 per kg paid to farmers last season.

Dairy exports fell 1.5% to $2.8 billion for the three months to January 31, amounting to 26.2% of the nation's exports for the quarter. Treasury predicts the New Zealand economy will contract for a fifth consecutive quarter, extending the recession it fell into midway through last year.

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