Have you seen the latest estimate for Fonterra milk payouts, $6.40! I know that Holy Cow was a terrible pun to make, but that’s a huge payout.
Supposedly Fonterra was able to hedge sales at $US0.71 during the time when our dollar was at $US0.80. When that good bit of management is combined with the continuing rise in world dairy prices you need up with a payout like this. To put it in perspective, last season farmers received $4.50/kg, so it is up by nearly 50%.
Hopefully we can convince farmers to invest some of this money into productive infrastructure, to increase our capital base. However, I think it is more likely that they will buy investment properties and some new quad bikes, as quad bikes are awesome 😉
Update: They didn’t say anywhere that they hedged at $US0.71, I was just tripping. Anyway, $6.40/kg is still heaps. I wonder if these prices are sustainable?