Further falls in global dairy prices indicate that even a $6.50 farmgate milk price could be in doubt

Those of us interested will recall what happened last time Fonterra forecast $7 at the start of the season. The next two seasons just about broke us.

https://www.winonadailynews.com/chp/dunnconnect/news/local/dairy-farmer…

Even after Orr opened his mouth with Satan like precision and made the dollar fall? Maybe Orr will take aim at the TWI next.

Oh Fonterra, you're such a one-trick-pony .. when it comes to innovation you say 'neigh' - send Boxer to the glue factory~!!

Farmers need to get some balls and vote out the rot at the top.

Farmers , like their Co-op leaders, need to be aware that like Houses, Like Oil, Like Venezuela, Like Turkey, Like all commodities, there are ups and downs.;;and droughts and floods and yes...Peaks and troughs.

Debt is not just tax deductible interest wise, it is crippling sometimes commodity wise, when there is glut, and also when people have little income, prices may fall. It pays to keep your powder dry and save for a rainy Day...like us poor people have to do.

Nothing is a one way street anymore, inflation, Land and its uses, used to be something Land Bankers and others milking the system, could rely on...

Banks lend on your circumstances.

Banks are the issue, when they stop issuing debt, but want their pound of flesh, and cannot milk the inflated systems for all that its WORTH....customers dry up, just like Cows, Paddocks and other commodities, being dampened down else where.

But when Customers, cannot or will not pay off everyone Else's debt, it becomes a millstone around and around the Financial System of all those who thought they had money to burn ad infinitude ally..

Our China al-lies, cups runneth over, their wishes are not what they used to be.......Awklanders and yes Farmers, have had a reversal...the money is not there to burn....get over it...one and all.

Money flows until it stops for reasons....then on to pastures....new.

There's a hole in the bucket, dear Liza, dear Liza,
There's a hole in the bucket, dear Liza, a hole.
So fix it dear Henry, dear Henry, dear Henry,
So fix it dear Henry, dear Henry, fix it.
With what should I fix it, dear Liza, dear Liza,
With what should I fix it, dear Liza, with what?
With straw, dear Henry, dear Henry, dear Henry,
With straw, dear Henry, dear Henry, with straw.
But the straw is too long, dear Liza, dear Liza,
The straw is too long, dear Liza, too long.
So cut it dear Henry, dear Henry, dear Henry,
So cut it dear Henry, dear Henry, cut it!
With what should I cut it, dear Liza, dear Liza,
With what should I cut it, dear Liza, with what?
With an axe, dear Henry, dear Henry, dear Henry,
With an axe, dear Henry, an axe.
But the axe is too dull, dear Liza, dear Liza,
The axe is too dull, dear Liza, too dull.
So, sharpen it, dear Henry, dear Henry, dear Henry,
So sharpen it dear Henry, dear Henry, sharpen it!
With what should I sharpen it, dear Liza, dear Liza,
With what should I sharpen, dear Liza, with what?
Use the stone, dear Henry, dear Henry, dear Henry,
Use the stone, dear Henry, dear Henry, the stone.
But the stone is too dry, dear Liza, dear Liza,
The stone is too dry, dear Liza, too dry.
So wet it, dear Henry, dear Henry, dear Henry,
So wet it dear Henry, dear Henry, wet it.
With what should I wet it, dear Liza, dear Liza,
With what should I wet it, dear Liza, with what?
With water, dear Henry, dear Henry, dear Henry,
With water, dear Henry, dear Henry, water.
With what should I carry it, dear Liza, dear Liza,
With what should I carry it dear Liza, with what?
Use the bucket dear Henry, dear Henry, dear Henry,
Use the bucket, dear Henry, dear Henry, the bucket!
There's a hole in the bucket, dear Liza, dear Liza,
There's a hole in the bucket, dear Liza, a hole.

If one looks at the interest.co tab for record of dairy payouts, you will see that usually dairy has at most 2 up years for payout before a reduction. So volatility in payout has been with us for decades - but it has been bigger swings between highs and lows since the formation of Fonterra. But this is not exclusive to the NZ dairy industry - worldwide there are fluctuations in payouts to farmers.
Farmers are more aware now of what their operational costs/kgms are and more are also taking notice of marginal costs.

What would be interesting to know is how many farmers are playing the dairy derivatives market and how many are making money on it and how many have lost money and if lost money, how big are those losses. Fonterra operated a guaranteed milk price - GMP - but then suddenly, without any real consultation with shareholders, pulled the plug on it and then lo and behold NZX came out with dairy derivatives. I would like to see GMP brought back - it helped many through the drop from $8.40kg to $4.40 then on to $3.90/kg. I understand OCD offered a form of GMP to their suppliers for this season.

Isn't the default backer the shareholders, via the final milk price? Or in the case of OCD - the suppliers? ;-)