But for dairy farmers there’s a much more important event – Fonterra’s announcement of its annual results on Wednesday.
First and foremost farmers all over the country will be wondering whether, in light of the recent downward trend in GlobalDairyTrade prices, their co-op will take the opportunity to signal a coming drop in the forecast milk payout. Or, they’ll hope, it might decide to sit tight, believing that the upswing in prices will come later this year or early next as predicted.
For most farmers getting off to a good start to the season they’ll have mapped out a few scenarios in their heads, or even on paper, about what a revision might mean. Those who wisely reduced debt through last season’s high prices will be congratulating themselves that they did the right thing. And if they deferred some capital spending for another rainy day they and their bankers will be giving themselves an extra pat on the back.
But for those who’ve bought a property, particularly their first, or taken a step up the sharemilking ladder, there will be little or no give in the system. They’ll be hoping that a steady as she goes attitude from Fonterra, perhaps with some cautious optimism about what could happen later in the season will be the course its board will take.
As always they’ll be hopeful that there’s some top-up available from the previous season, but mindful of Fonterra’s recent announcements over its joint venture with Beingmate, they will be wondering if larger than expected retentions might be on the cards.
It’s a fine balance between preparing the groundwork for future growth and making sure that shareholders and suppliers are in a position to provide that extra milk when and where it’s required.
As usual there’ll be a close eye kept on debt gearing as, having got into much more comfortable territory than the co-op was a few years back, farmers won’t be wanting to see any undue slippage.
Fonterra chairman, John Wilson, right, and chief executive, Theo Spierings, at the co-op’s half-year results announcement in April.
They’ll also be acutely aware of Fonterra director elections which will be underway before they know it, with candidates due to be announced on September 23, just a day before the next expected Fonterra payout update on September 24. It’s looking as though there will be plenty of differing viewpoints from those throwing their hats into the ring this time around, after the retirement of long-standing director Jim van der Poel.
Maybe there will be the repeat of some of the large fields of hopefuls seen in the past – some of those who were unsuccessful have indicated they will be running again and some new faces are promised.
One issue sure to get a hearing both in the wake of the annual results announcement and during the director election campaign is that of the calculation of the co-op’s milk price. While the Commerce Commission hasn’t strayed far from its initial approval of the way in which this was carried out, there are shareholders who strongly feel that farmers are losing out to unit holders.
There’s been plenty of explanation before and some of this is likely to be repeated and added to as Fonterra seeks to defend its position. True, it was caught by a very unusual set of circumstances, but the fact that it happened so early after the implementation of trading among farmers (TAF) has made some shareholders even more nervous that the robustness and transparency of milk pricing which they were promised hasn’t come to pass.
They need to be sure that as owners of the co-op its first duty remains to them, not to unit holders who may buy one day, sell the next, and not think any further about the New Zealand dairy industry’s future. This they were promised with TAF.
Fonterra farmers are the long-term players and there are plenty of options for them now when it comes to start-up dairy processors, both well established and well on their way.
Their loyalty will come with their co-op honestly listening to their concerns, making every effort possible to put the matter right, and plenty of reassurance that it’s not a case of lip service being paid to the issue.
If it isn’t resolved at this stage it could well taint TAF unnecessarily in the future, with the director election just the forum for doubters about the scheme’s establishment to take the issue to a whole new level.
