Should Fonterra be doing more for milk price announcements?
In the not too distant past, the hard-working Kiwi dairy farmer could command a whopping NZ$8.40 for a kilogram of milk solids, but ever since the global dairy trade took a tumble and the market became saturated, that price fell away to the levels that we see today.
However, Fonterra is now being pressured into publicly reporting its milk price guidance throughout the season, as well as improving its communication practices with relevant parties as the new forecast is set be revealed.
Economist for ANZ Con Williams has led calls for the nation's largest company to be less secretive when it comes to pricing guidelines.
"Communication is an issue, particularly around the milk price. There's a lot of interest in it. There needs to be more transparency around timing of announcements and more regular announcements, on a monthly basis," said Mr. Williams.
What sort of prices can we expect expect to see? Nothing can be certain in the world of dairy farming, of course, but Mr. Williams expects a price in the range of $3.50-$4.00 per kilogram, with a total season guidance of $5-5.25.
John Shaskey, a former senior executive and board member of Fonterra, warned dairy farmers that prices may not recover for another couple of years, and not to expect a particularly quick turnaround in markets.
"In the longer term timeframe, it's still the right business to be in," he reassuringly explained. "But there is going to be some pain."
So while the general consensus seems to be to sit tight and ride out the storm, it look as though things may get worse before they get better for the intrepid dairy farmer, though the signs of recovery may not be fully apparent until later on in the year.
"I don't think there can be a really good read on the market and what it holds for 2015-2016 until that point so it becomes an exercise of throwing a dart at a dartboard (until then)," Mr. Williams explained.