Farmers Riding an Up-Curve; Fonterra Lifts Payout As Farm Prices Race Ahead

By GEORGE, Liz St

THE dairy boom is hitting home in Taranaki with farms changing hands at record amounts as milkfat prices reach unprecedented levels.

A Huirangi farm has fetched a Taranaki record price selling for $13.4 million while a second sold on Wednesday for $7.26 million.

And yesterday Fonterra lifted its forecast payout by 50c to a fresh peak of $6.90 per kg of milk solids. Many analysts expect the good times to keep on rolling.

Fonterra chief executive Andrew Ferrier said a biofuel-driven demand for grain was raising global farming costs, which in turn was pushing up global food prices, including dairy products in which Fonterra controls nearly 40% of international trade.

“Combine this with the weak US dollar, and we believe the long- term outlook for dairy prices will be well above traditional averages,” Mr Ferrier said.

The average Fonterra farmer will receive at least $806,000 for this season, and there is speculation the co- operative’s 10,711 farmer shareholders will actually receive $7/kg or more at the end of the season.

Agricultural contractor Clive Jury bought the 230ha Huirangi farm 10 days after it was passed in at auction on November 16.

“I was lucky the bank manager was attending the Ellerslie Flower Show. He was not there to tell me I couldn’t buy it,” Mr Jury said.

Riverview Farms was owned by a Waikato and New Plymouth couple.

“I wasn’t expecting to pay that much, but you’ve got to do what you’ve got to do if you want it,” Mr Jury said.

“I’m stoked. I bought it just because it is a good farm, just a nice flat farm. It is handy to where I run my contracting business and I grew up in Tikorangi.

“It is sort of a little out of my range, but the bank has been awesome, that’s probably one of the main reasons.

“I said to the lawyer, in five years we’ll go ‘that was cheap’.”

Mr Jury will take over on June 1 and put a sharemilker on.

The 39-year-old also owns a farm in Pio Pio which he wants to sell to help with mortgage repayments. He is hoping to get $9m for that.

Riverview Farms produces 240,000kg of milk solids per year and was sold by Allied Farmers First National Real Estate in Stratford.

Branch manager Owen Mills says the number of pre-Christmas farm sales has been about the same, but they have been fetching more.

“The market is on a surge. It is my prediction we will see a few more after Christmas now people know where the market is at.”

The $7.26m farm was at Kaimiro and owned by the Dombroski family.

Dairy farmer Kathleen Adamski summed up for many the news of the Fonterra forecast payout.

“Pleasing. Everyone would be pretty happy,” she said.

Farmer John Washer is not surprised.

“The world commodity price is so high. Hey, it’s good news but I’m probably not so excited about the huge swings.

“What goes up usually comes down. The payout seems to go down, but prices escalate up,” he said.

“This is good for the wider community but I’m very concerned for the young sharemilkers in the cost of the cows, the swings of trying to do a budget going forward.”

Mr Washer is not sure of the politics involved in the payout.

“Personally, I’d rather the board took a bit off the payout in the good times for their expansion plans, rather than risk outside investors who may not worry about the milk price in times of lower commodity prices.”

The Fonterra board also set the interim Fair Value Share Price for the 2008/09 season at $7.01, a 22c increase.

* Editorial: Page 9

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(c) 2007 Daily News; New Plymouth, New Zealand. Provided by ProQuest Information and Learning. All rights Reserved.