BusinessDesk: Dairy product prices fall 9.9%, biggest drop since mid-2010, in Fonterra’s GDT auction

Prices of dairy products had their biggest decline since July 2010 in Fonterra Cooperative Group’s latest GlobalDairyTrade auction, pushing the price index below its 10-year average.

The GDT-TWI Price Index fell 9.9 percent compared to the last sale two weeks ago.

The average winning price dropped to US$2,983 a metric tonne.

Prices fell for all six products on offer and across all contracts.

The Real GDT-TWI, which is the GDT-TWI deflated by a measure of the US consumer price index, fell below its 10-year average for the first time since 2009.

The decline in prices comes as commodity prices hold near their lowest levels this year, based on the Thomson Reuters/Jefferies CRB Commodity Index of 19 globally traded commodities. The index most recently rose 0.4 percent to 302.09. Commodity prices have softened on signs demand may slow in China, the world’s fastest-growing major economy.

The average winning price for whole milk powder fell 11 percent to US$2,847 a metric tonne and skim milk powder fell 7.6 percent to US$2,871 a tonne.

Anhydrous milk fat dropped 6.9 percent to US$3,304 a tonne. Cheddar fell 12.1 percent to US$2,937 a tonne and milk protein concentrate declined 3.9 percent to US$4,520 a tonne. Rennet casein fell 11.9 percent to US$6,424 a tonne.

There were 118 winning bidders over eight rounds, out of 134 participating bidders. The number of qualified bidders rose to 610 from 603.


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'Milk coming out of our ears'
The decline reflected the continued strong output of milk in the major exporting countries, including New Zealand, where the auction's owner, dairy giant Fonterra, is based.
"The world is flush with milk. That is the issue right now." FCStone dairy and commodity analyst David Kurzawski told
"In the US, we have milk coming out of our ears. There has been talk that some milk will be discarded.
"Oceania is not much different, and the European Union no much different. The only place perhaps not going gangbusters is South America."
Meanwhile, demand is "stable, but does not seem to be growing at the same rate worldwide as last year".

The market is also acutely aware that despite non-inflationary injections of liquidity out of  central banks in the major jurisdictions, the only substantial recorded growth other than algorithm based stock price rises is poverty.
Not much different in dear old NZ as reported here yesterday. 
John Key's naive at best comment is laughable :
"Basically if you want to give the global economy [a boost], you need to get U.S. consumers buying again, and that will happen only if they feel they have greater job security," he said.

He's made a few such comments that if you stop to think are moronic.......and this is the guy leading the National Party who we voted for to be PM and lead.....oh dear. 
Interestingly when you look at the Republicans ocrossthe pacific their candidates seem to be utter morons who walk around with their feet in their I guess we will follow.
Welcome to the new dark age.....heralded in by the 2nd Great Depression.

Yes & yes.
Heralded by the obvious:
According to the Census figures, the median annual income for a male full-time, year-round worker in 2010 — $47,715 — was virtually unchanged, in 2010 dollars, from its level in 1973, when it was $49,065.
Overall, median household income adjusted for inflation declined by 2.3 percent in 2010 from the previous year, to $49,445. That was 7 percent less than the peak of $53,252 in 1999.

Stephen... When u say non-inflationary injections of liquidity.. I'd qualify that.
My guess is that most Western Countries might be similar to NZ.. in that the Non Tradable sector better shows the effects of injections of liquidity ( nice way of saying money creation ).
If u use the old way of calculating CPI.. inflation is alive and kicking in USA
And yes...  that equals a massive squeeze on the average persons standard of living.... 
John Keys quote...  
Sadly all the Leaders of Countries seem to be stuck in the old paradigm.... Growth at all costs..  and it does not matter how.  And the standard of living of ordinary people seems of seconary importance to them.

Hi Roelof
I disagree not with your interpretation in so much that which we need will rise relentlessly in price relative to incomes while that which we wish for will collapse in value. 
My point being, all the central bank injections in the world amount to nothing if they cannot be found in the hands of the very people charged with the liabilty of it's existence.
The US volume is found stuck at the District Federal Reserve Banks, throughout the country, in the form of virtually non-interest bearing deposits. Good for nothing except as collateral against bank cheques cut and speculative position margin guarantees. 
Figures can be dug out for the ECB's pile of inert deposits are far as ordinary taxpayers are concerned. 


Stephen...  I'm thinking more of the FEDs QE and the ECBs'  LTRO... 
This is basically a transfer of risk and wealth...  At the expense of who..????
This is money creation that is preventing monetary deflation..  I'm guessing they will keep doing this for as long as they can.
It is not a free lunch... As far as I can see is the middle class and ordinary people who are/will pay the price.
Not sure what u mean by  
"My point being, all the central bank injections in the world amount to nothing if they cannot be found in the hands of the very people charged with the liabilty of it's existence."


Hi Roelof
I mean the QE money by prior agreement with the Fed was deposited back with the Fed in the individual A/Cs of the banks it was given to and not made available to ordinary main street customers of the banks.
Obviously the liabilities of the Federal Reserve system remain with the taxpayers .  

Meebee Jolly Kid thinks that  he is the spirit of Ronald Reagan re-born , and if he says these rambling soothing inanities , we'll all think that he's a wonderful old duffer to lead us into the promsed land ( i,e, anywhere past the next election ! ) ............
........ come winter , if John Campbell does an interview link to JK , and our guy is sitting in an easy chair next to a roaring open fire ....... then either my words have come true ....
... or Walter & Christov have started the revolution , and are burning the PM at the stake ......


Winter is coming and “NZmilkpowdersnow”.
Stop economic megalomaniac ambitions by the nuts – sack the PM and a few frontbench ministers – not performing.
Making real money PM – economic diversity - R&D plus production - decent employment of the wider NZpopulation..
E.g.  - Bertarelli learnt about business from his father, who owned the Serono pharmaceutical company. Founded in Rome in 1906, it made its fortune from a fertility drug derived from the urine of post-menopausal women, specifically Italian nuns. By 31, after his father's death, Bertarelli was running the multinational group, which was sold to Merck of Germany in 2006 for $13.3billion.

Then the roaring 6 deacades will transform into a nightmare which will blow torch the downs syndrome smiles off everyone faces.


Hypertiger - It's all become unstable and is going to collapse...demand will drop and production/supply will have to be cut again.

Over the last three auctions (6 weeks) we have had declines of 5.0%, 3.5% and 9.0% (almost 17%). Since the 1st of March 2011 the decline has been 38%. Important questions are:
1. Where next for dairy commodity prices?
2. Why is Fonterra's strategy for itself and the NZ dairy industry still focused on increased milk production from NZ farmers?
3.  Is Fonterra's governance/senior management even capable of developing competent strategy?

1.  USA seems glutted with sure the US dairy industry gets big subsidies? In NZ then it couldrturn like the apple industry pulling out of orchards will occur....but, oh dear some ppl have paid a small fortune to convert....
2. Growth is locked in....need more and more income/profit to justify worth....when it doesnt bye bye share price/company/economy/country.
3. is anyone? I talk about Peak oil and AGW and the severe risk to the economy and business and no one listens or comes up with a lame excuse...if so many ppl only look at what they want to look at and discard risks out of hand mainly due to policytal blicnkers then how can they develop a successful strategy? 

"That the farmgate price of a litre of milk"   sorry but to clarify how does what a litre of milk buy compare to 10 or 15 years ago?

Dont know what the farm-gate price of a litre of milk was 15 years ago, but in 1980 milk was home delivered, early evening, by the milkman using schoolkids using special trolleys, in glass pint bottles, 600ml, bluetop and greentop only, for 20 cents a pint, delivered to your front gate.

Average dairy payout was $3.42kg/ms in 1997/98.  Approx 27.5c litre. Today it's approx 55c litre.  Not every farmer receives the same payout as it depends entirely on the fat:protein ratio of your milk.  Some farmers receive more than announced payout, some less.

3.  Is Fonterra's governance/senior management even capable of developing competent strategy?
Colin R....I think the departure from the concept by Fonterra Corp in involving themselves in areas not  necessessarily in the interests of the shareholders long term, is begining to expose the soft underbelly of this gargantuan caterpillar whose only form of defence is it's sheer size.....
retrench ...van der Heyden...retrench..! before it's too late.
Growth for the sake of growth......dear true.

Falling prices are the symptom, the cause is overproduction. So who's going to cut production first?  
 California processors of Cheese and Butter are at max capacity and turning product away,which is then having to be sold to the milkpowder factories. Who's the lowest cost producer?

As I said over at 90 at 9 A.J. watch the jawboning on the NZD from Key  rise to a scream.
get it ...ahhhscream.

Christov: "watch the jawboning on the NZD from Key" ... I have a more cynical view ... have noticed  that Key (always) appears to make NZD sensitive statements about 3 or 4 days prior to the release of (major) NZD sensitive information ... ie todays CPI ... which is a coded message to someone in the game. Watch the CPI figure today ... and the NZD

If only the dots were connectable iconolast.....Down goes the Horse.!!!
Make no mistake, this administrations preocupation with Fonterra is not accidental and has been manipulated at every opportunity to the detriment of many Export orientated business.
 But as I said a while back too many eggs in the one cow does not guarantee the growth of the herd.

Was actually giving you a heads up on how to play the forex game .. watch his lips

So was I iconolast...on who was getting the heads dont get 12% net of your bottom line cause you got lucky.

dont forget US subsidies, import restrictions,......back handers.....lobbyists fees etc etc.....

Ah, the ridiculousness of it all... Too much milk, meanwhile poverty right next door...
Auction prices down massively, do you think we will see a drop in the price in supermarkets? I don't think so..
maybe time to convert back to lamb farming?

not only that but waste whey is being used in "fresh" milk.....oh but then again waste is free...and in fact you might have to pay for its disposal....makes perect sense really.
"lamb farming" but look at the wasted capital...and indeed yet more conversions still happening? which of course makes sense with no CGT.....take out a huge loan to convert, claim the interest as debt, pay no tax and cash out on the capital gain at the end tax free....
Great until is stops working....ho hum......

Unfortunately, the price of lamb has dropped a lot more than a kg of MS

Most businesses have their returns from their produce go up and down. Look at lamb...Late last year $8.10/kg, now $5.72,  bull beef once again a high early this year of a smidgeon under $5.00, now its sitting at $4.10. Has the dairy industry so overtaken NZ that  we all have to collectively wet our pants each time the milk price changes?

Yes, thats just the point.

Belle I like your no nonsense approach, would you be suggesting that we can use $5.72 for both lamb and dairy soon. Here is a montage ...
Press Release from Federated Farmers
“We will have to watch what happens over the next few months, but with Fonterra already having revised down it’s payout by 45 cents to $6.30 per kg of milk solids, New Zealand dairy farmers should begin preparing for a potentially lower milk price forecast for the 2012-13 season.
From Currencies on this site:
Dairy prices slumped 9.9% at this morning’s auction, to the lowest level since September 2009. This is a genuine fall, not a function of currency valuation effects (the USD is little changed from the last auction).
Dairy prices are now down almost 35% from the March 2011 peak. This adds to the prospect that next seasons dairy payout will be materially lower than the current one. Fonterra will announce their first forecast for next season (June 2012 through May 2013) before the end of May.
From the International Press:
Powder for June delivery slumped 14 percent to $2,766 a metric ton, the lowest level since Aug. 4, 2009, according to the weighted-average price from Fonterra Cooperative Group Ltd., the world’s largest dairy exporter. The drop, the ninth consecutive decline, was the most since August 2010, it said.
“There’s still ample supply out of New Zealand and there’s talk that Chinese buyers are out of the market,” said Michael Harvey, an analyst at Rabobank International. “They’ve filled the quota from New Zealand quite quickly and have built up a short-term stockpile. There’s an expectation that they’ll be out of the market for a couple of months.”
There is a school of thought that suggests the processors are doing it hard.
Fonterra paying 1/2 yr dividends out of reserves. And a large slice of ANZ operations earnings taken away by the Oz supermarkets. And past retentions that could have been larger.
Open Country tapping shareholders to cover 2 years annual losses, and mislaying their bankers.

- Synlait looking to raise capital for its farming ventures not by nature of divestment but again due to being A. Constrained by capital (too much debt) and B. Shareholders wanting to get out but no liquidity within the ownership model.

On farm the over and above issue is that the major weather pattern driving grass growth for the past 2 years may be coming to a moving on:
The long spell favourable New Zealand pasture conditions, which have sent milk production soaring, may be about to end with the close of the La Nina
might be time to join the kids for their gap year next .......

The Chinese are usually out of the market until Sept so it won't really be until GDT auctions from then on that we will know if these drops will be sustained drops.  One thing about the drop - the USA usually pulls back production at prices around $3000/ton. There's still a few balls in the air yet.
I'm budgeting on $5kg/ms for next season.  We may get $5.75 but as owners with 50/50 sharemilkers we only get half of the payout ($2.87kgms), so if there's an extra 75cents in payout we only get 37.5c and that will be our buffer. We are spending >100k on sustainable/environmental upgrades over the next 12months-have been planning it for the last two years.
A mate has just bought another farm for next season breakeven budget is $5.05. Compare that to what the bank says that a lot of their clients need $6kgms to breakeven......................

Henry  I work in the industry and I have never met a bunch of people more overexcited about their own problems than dairy farmers. So it seems par for the course that now the whole of NZ gets paranoid over the price of a kg of ms. 

Belle the dairy folks I know are far more concerned about the effects of DIRA, TAF and finding the $ to fund new environmental policy changes than they are about payout.  Those who have been around a while, know payout goes up and down. In a lot are surprised it has stayed up so long. You are right though that the rest of NZ sems to get paranoid over the price of kg of ms. Quite comical in away.
Wait till the sheep and beef industry have to fence off their waterways, which will come, and then see if it is dairy owners who are the only one's overexcited about their own problems.  ;-)

Cas Ob, come on admit it, dairy farmers become obsessed with production figures, employment issues etc etc..... dry stock farmers are obsessed with hunting. I dont think they are too worried about the fence the streams thing.... its more a source of amusement that townies think that  would be goer. 

Then, Belle, they've lost sight of what it is they're handing on. If they've morphed into thinking they're handing on a gravy-train, the process fails, only question being: when?
If they seriously want to hand on a going-concern, then that's a different issue. Long-term, few kiwi farms cross that thresh-hold.

Belle, if you truly believe that fencing waterways won't be a goer, you and any others that think that, have blinkers on.  Beef and Lamb NZ have already raised it recently by saying that is what is recommended 'where practical'.  This is the first shot across the bow.  In other words, get your head around it and start to do it voluntarily because in time it will be compulsory.  Dairy farmers are getting their act together and so it will soon be that authorities are no longer going to be able to blame the industry as a whole for all the environmental problems.  That's when they are going to start on Beef/shhep/deer etc farms. 
In Southland the dairy demonstration farm has scientific proof that the water leaving the farm is better than what it was when it entered. But the standout example is that of of a coastal dairy conversion.  They converted a sheep/beef farm on relatively sensitive coastal soils and sensibly took water quality readings before conversion. The water readings now, as a dairy farm, show that water quality has improved. The single biggest contributor to that is fencing off the waterways. More and more dairy farmers in Southland are testing for water quality to disprove that they are polluting. It perhaps shouldn't be surprising that the biggest offenders of the winter grazing rules in Southland were sheep farmers - head in the sand attitudes by the majority.
Perhaps it is that 'obsession' with KPIs (production, employment etc) that has enabled the dairy industry to remain relatively sucessful. ;-)

Cas Ob your idea of successful and my idea are definately very different. We'll see how successful dairy is when oil becomes a limiting factor. I think pdk and I have a lot more in common than he thinks. Yes this fencing is very amusing and if you cared to take a look around the average hill country farm you would see why.
A wander around the King Country for instance, tiny, but deep streams meander all over the place,( full of eels). Yes the idea of fencing these off is laughable, it would be such a big job we would need all the Chinese and Indian population to come and give us a hand. And the budget....hehe...well remembering to keep sheep out you need an 8 wire fence.... post and batten. Yip a bit different to the old dairy cow, 2 hot wires and widely spaced posts.... then gosh the angles and stays and .....hell you would have to bulldoze the lines..... resource consents to put the bully on the job.....
Its amusing because we just arent that bloody stupid.  Dairy farms are industrial units, and bare no relation to what goes on in the upper regions of our countryside. Yes there will be some areas that should be fenced, but in the greater scheme of things most wont and dont need to be.
Many areas of NZ were cleared of native when they should not have been, but we have come a long way in the last 30 years with tree planting on susceptible areas, fencing dams and lakes and rivers. Having just spent the last 2 months working on some of the bigger type of drystock farms  on both sides of the divide in the lower north island I assure you a lot of thought has gone into looking after these properties for the next generations to enjoy. Sand dunes stabilised with pines, 4th generation sheep and beef farm, totara and manuka left everywhere. A coastal farmer fighting furiously against fracking.
Every dairy farmer I know their first priority is to get rid of every tree on the property.  Just take a look at the canterbury plains. Your stories of there being less pollution with dairy cows is unbelievable... I still see urea going on in the rain. And what do you think happens when 1000  cows piss in the same spot on the same day. No matter that they cant access the waterway, that piss eventually gets there because the soils cant cope, and you arent calling a holt to that. Treating your soils the way you do is environmental pillage on a much bigger scope than the odd beef cow that pees near a stream. Thats the funny part, your industrialisation of huge swathes of nz and your total denial.

Ah Belle, you are so quick to judge the actions of a few as the actions of the majority.  You say that every dairy farmer you know gets rid of every tree on their property - you live in a very isolated world if that is the case.  Yes a few years ago many farms, almost exclusively conversions, did knock down trees, but the reality is that they are not the majority of dairy farms Belle, despite covering large acreage. These days many  farms are back to planting trees - shelter and riparian strips.  I hear some 'howls of concern' from dairy mates in the Waikato' of the new rules being brought in there and as a result fencing off riparian strips is happening at a great rate of knots. - Its great to see the Waikato finally taking it's environment seriously.
With soil moisture probe monitoring and the subsequent technology that comes with it effluent could be applied to what Joe Public would call 'wet' soils - depending on soil types.  Effluent consents in Southland (new or renewal) require soils samples to be taken by qualified geologists and an individual farm effluent management programme adapted from that. I see that as very positive, but I just know that when Joe Public comes past our place and we are applying 'effluent' they will probably get anti.
Sheep/beef farming is conducted in more than just the King Country and there are many beef/sheep farms throughout the country from which waterways will benefit from being fenced. The biggest problem in waterways according to the latest report from the Environment Commissioner is sediment, followed by nutrients.  There are many hill country farmers who are planting up their hillsides, I agree on that. Many have QEII covenants and there a a lot of good people doing good work. Some Southland sheepfarmers have started to fence off their streams, so it is not impossible for others to follow.  I believe the requirement will eventually come in on a catchment or community basis to start with. A sheepfarmer in our discussion group who converted his property - 1000cows - openly states that his farming practices now are more environmentally more friendly  than he was as an intensive sheep farmer. He said that is one of the surprises of converting his farm.
Your stories of there being less pollution with dairy cows is unbelievable  That's the problem when people only want to see what they want to see while the world around them is changing. Check out these links:
One of the Equity Managers involved in South Coast Dairies, Lynsey Stratford explained their commitment to riparian fencing and native plantings and fencing off a wetland and native podocarp bush area which have all contributed to improved water quality.
This same farm was an Awards winner in the Environment Southland 2011 Awards for planning and establishing a dairy farm in a manner that avoids adverse environmental impacts.
Dairy alone is not responsble for waterway degradation and measures taken by dairy alone will not fix them.  We are all polluters Belle, and sooner or later we ALL need to wake up and acknowledge the fact. The wise non-dairy farmers who have waterways that will in time need fencing off, will be making contact with their local landcare groups etc and getting the jump on funding assistance etc. The unwise ones, will stick their head in the sand and say 'no, my farm is different'. Some Southland sheepfarmers have started to fence off their streams.
Waituna dairy farmers, Fed Farmers, Dairy NZ and Fonterra challenged Environment Southland to prove with science that the Waituna Lagoon degradation was caused by dairy.  It caught ES by surprise. Perhaps the biggest surprise when they looked in to it, was that they actually had no robust data on which to base that assumption.  Nutrient levels and ruppia health were being used at bell weathers.  What has since being discovered is that sediment is the biggest problem, not nutrients. Also 'how high, is high,' is the question now being asked of nutrient levels.  This question was also posed at the recent National Wetland Symposium.  Scientists don't really know, they are guessing. In the case of the Waituna, ruppia have not being as healthy for years as they were when monitored in Dec 11, yet nutrient levels were high. What had happened though in October, was that the lagoon was opened to the sea and flushed.  So is it really the nutrient levels affecting the lagoon or does the flushing regime have the most effect?  Nutrient leaching from DoC land around the lagoon (7000odd hectares) are also surprisingly high. What the Waituna has proven is that water degradation is a complex issue.  Simply pointing the finger at dairy and saying 'sort dairy, we sort the problem' is proving to be somewhat of an urban legend. That's not to say we don't have a part to play in using best practice, we do, no more or less than any one else.

Casual Observer forgive me for being pissy. I shall explain a little. There we are happily farming away our little lives on our little farm, being reasonably environmentally concious.  Next thing you know every farm around us has converted and is milking cows. Suddenly when I go to town and get asked what I do for a living instead of getting a nice warm response to telling people I am a farmer, I get a filthy look. True. Because dairying went berserk and made a mess, we all have to bear the brunt of it.
Now you are trying to scare me with having to fence all my waterways? You imply I am equally responsible, and that its all actually an urban legend anyway.
 I am now told after living here 20 years I shouldnt drink the river water any more! Gosh but thats just coincidence. Urban Legend n all. Theres a Tui billboard there somewhere.
(Dont bother telling me to fence off the is.)

I feel your pain Belle. :-)

Does this mean we can finally get cheaper milk at the supermarket?

Ask the supermarket Billy.  How much of a drop in price at the supermarket did you notice when Fonterra dropped the price in February?

This reply to comments thing is being a bit weird.... But this is for you Henry, if you have a glance at the map of the world, there is loads of land available to grow food. I hear you can grow watermelon at Haast.... so the idea that our milk and meat are going to be worth a fortune is a sad joke. Yes there will be some highs, but essentially we are all going to get poorer not richer until we figure out a new source of easy energy.
Dairy is a bubble, built on the debt of a nation. I look left and I look right..... I see a big hole, in which the future of our kids was buried. Who really believes that the over capitalisation on these dairy farms, will ever be paid back. Most survive on interest only loans.
 Inflate away our debts and destroy our faith in the dollar? Is that what we have to do, but by doing that would these businesses be crushed by massive interest rates....these are the things I ponder, to which I dont see the economists trying to answer.  

And believe me Henry, I search the internet daily looking for this answer, as I have family in big doo doos if high interest rates, inflation etc take off.....No one seems to know.

Don't worry Belle  - blokes like me lending it to your family at low interest rates are complelety knee deep and it's rising.

Stephen, its all going to be fine, as long as you dont want your money back soon, or for a really, really long time, by 2100 we should have things sorted, of course your dollar will buy as much as a penny does now but at least you get it back.
 If you want it back soon then I think we need to have a little talk with the guy down the road with a house on a %95 LTV mortgage. Its ok as long as he keeps getting the accommodation suppliement,  as long as tax payers are happy tp support him , he can keep paying the interest and you keep the illusion that all is ok with your investment in a bank deposit. If house prices fall then he may as well walk away. So I think JKey has the best approach, smile, wave and appear confident, I mean it is a confidence game after all, or is that a confidence trick?
 I think the dairy collapse has just wiped about 4 billion off  the value of our exports.

Call me thick if you want but what the hell does that mean plain english please

@Belle, you can call me thick if you like if you think the label fits after reading this.
-The RBNZ's proposed Open Bank Resolution states that I deserve to lose a proportion of my bank deposit following a bank collapse because I have been rewarded with interest and should have undertaken due diligence. Difficult when off-balance sheet items are not required to be disclosed by law.
-The Austtralian owned banking system is not particularly well positioned to weather borrower difficulties due to the high level of gearing. News which I posted today on another thread puts this in perspective.
- The only non government stock and tbill investment institution that offers a government guarantee is Public Trust. The rates are posted here.   
- I keep choosing the six month option thinking rates must rise as they have in the PIIGs sector of the eurozone to reflect our endemic net per capita debt structures. And yet this rate just fell from 3.50% six months ago to 3.20%, and now to 3.05% as of  yesterday. Note that the term returns do not adequately reflect term risk.
- So, 3.05% minus 33% tax, less the latest annualised CPI rate (1.6%) gives a real return of 0.4435%. This hardly covers the risk of a government running continuous deficits since it came to power and the rise in prices, above the CPI rate, of the things I need - rates , power, petrol etc.
- But the real problem is that the nominal economy keeps growing at a rate far above these gross interest return numbers I am left with to maintain the spending power of my capital over time. The last nominal GDP release recorded a annualised growth rate of 4.84% for the year ending December 2011. Previous nominal annual GDPgrowth rates for respective preceeding quarters were 6.09%, 5.86%, 5.87%.
- So in plain English I am up to my neck in shit if I live too long and will have little to lend to the NZ economy that would concern anyone as time passes.  And as AJ points out I will probably go down along with the rest of the creditors if interest rates rose to compensate for the real risks your family and many other borrowers pose to the solvency of the system. Dr Cullen made it clear he believed the Government would try to bail out the banking system in the event of default. Hardly a possibility as Greece Spain UK etc are finding out.

Thanks Belle for asking the Question you asked. 
And thanks Stephen for the answer. Much appreciated

Stephen, I just had a look at UK deposit rates, ours are much the same.
 but when I looked at the offshore rates they were terrible. Iran is worth a look, that or Vietnam.

Just thinking out loud, I see the Euro banks may have to sell a few assets. Could be a few  opportunities to get a cheap deal.

IMF fears $3.8 trillion forced asset sale by eurozone banks

Thanks for the links Aj. :-)

Gosh Stephen you might do better with bonus I am getting the gist that you are thinking rates arent going up in any sort of a hurry.

Tell her to remember the game called 'Musical Chairs'. Then to envisage one chair removed when the music first stops, two the second time, four the next, and so on.
Tell her to imagine the looks on the faces, and the rate - if any - that recognition of the moving goal-posts dawns on the remaining players.
Then to notice that some have glued their bums to the remaining chairs, thus removing the goal-posts completely.

I definately could do with lots of financial advise, but I worked the slavery thing out a good 10 years ago as I watched rural and urban debt go berserk. I bailed up my bank manager around 2004 I was so pissed with what was happening. He reckoned it was all very affordable......I would love to know what he reckons now.

Belle - don't know what you've read, but the Martenson piece is as good as I've seen. I presume the process from here on, is that those with the power and in the know, will hoover up all the real assets - land being a biggie. In an unregulated 'market', the small always fall to the big, the vulnerability being debt. The warning-sounds are coming from physics Professors (no surprise). Better to be debt free on less acres, than vulnerable to that lot on more.

Hi Aj, I wonder how much of that $174k net profit is due to subsidies?

The $240K for 2011 and $174K for 2012 are net cash farm income.  I doubt there will be any profit on the $174K particularly if feed costs stay near to current levels. 

Excuse my ignorance, but wouldn't net cash income, be income after farm working expenses.

Agree Omnologo.  I was always taught net meant after expenses.
Hey have you heard about the 2nd vote for farmers on TAF on 25 June?  The Board finally seems to have seen sense, if for no other reason than to say they have a 2012 mandate and not rely on a concept vote that took place in 2010.  Took them a while.

The trend on oil is also starting to curve down.................ho hum.