IN CASE you missed it, Fonterra last week released some fantastic figures in its payout announcement.
An opening forecast farmgate price of $7.00/kgMS for the 2014-15 season – a historically high figure that matches the opening forecast 12 months ago at the start of the 2013-14 season.
The forecast 2013-14 payout of $8.40/kgMS, with a forecast dividend of 10c/share, means a record total of $8.50 for a fully shared-up farmer.
And a strong milk supply is forecast for the new season – 1616 million kgMS, up 2% on the current season forecast of 1584 million kgMS.
These figures are a massive boost for dairy farmers, rural communities and the wider economy but if you got your news from the daily print and broadcast media you could be forgiven for missing them.
Our Australian friends at Fairfax led the rush to bad news on their ‘farming’ web page with the headline ‘Fonterra signals $2.2b dairy payout cut.’ Never mind that the $2.2 billion dollars never actually existed or that it is only the difference between a record payout this year and a pre-season, and therefore theoretical, forecast.
Fairfax wasn’t alone, of course. All its metro-based brethren took the low road. The TV One News website lit up with “Fonterra has cut its forecast 2014 milk payout… and expects the payout for the 2015 season to tumble to $7/kgMS.”
At its media conference Fonterra provided ample context so the assembled hacks might see the silver lining, not just the cloud. For example, chairman John Wilson said the new season forecast was historically high, but reflected current market conditions. “Our farmers understand the realities of dairy commodity price cycles, and will exercise caution at this early stage in the season,” he said.
He could have pointed out that the opening forecast of $7.00 is up $1.20 on the 2012-13 season that ended at $5.80/kg, or $6.12/kg including the 32c/share dividend.
Bank economists also did their best to add context to the reportage, although these comments were largely buried as metro media strained to accentuate the negative.
ANZ’s statement was balanced, and consistent with the other banks: “On the face of it the decline in the payout between years is a drag on the economy over the coming year, but that dynamic is exaggerated.” The coming year’s payout will still be the fourth-highest on record, and from a spending point of view farmers will be in a similar cashflow situation.” ANZ also said average farm profitability is still expected to be nearly $3500/ha – nearly three times the seven-year average of $1150/ha.
Plenty of potential for a positive headline then, but Fairfax et al think the only good news is bad news.