And they are getting edgy about the co-op’s change of direction – both in the lack of detail and its failure to show up in improvements in the third quarter results just released.
However, they still have faith in Fonterra as the best vehicle for their milk.
Melissa Slattery runs a 300-cow dairy herd with her husband Justin in Waikato.
The couple, Sharemilkers of the Year 2015, recently moved north from Canterbury to become farm owners.
Slattery is also an accountant. “Yes, I do a bunch of forecasting,” she said.
“And yes, this result comes as a surprise and I am disappointed.
“I think the ranges are positive because it is hard to forecast 15 months out so I don’t think $6.25-$7.25 is a bad thing. It’s pretty difficult to get it right on a single figure.”
But Slattery said this season’s drop is very disappointing.
“The mid-point of $6.35/kg MS means millions of dollars to dairy farmers.
Farmers will be redoing budgets.
As for share earnings – “It means capital tied up. Of course they are not a good return on investment.”
“And dividend earnings, who knows what that will be in October. I’m not counting on anything.
“We all know there’s work to do in sorting Fonterra’s investments and strategy and getting the return on our investment but how much more hardship can farmers take while they wait.
“Everyone is questioning their investment now.
“Patience is getting a bit thin and rightly so,” Slattery said.
“In terms of this season’s pull back to $6.30-$6.40 it is a surprise,” Horowhenua herd-owning sharemilker Richard McIntrye said.
“Most of us have budgets done up to the end of the season and to lose 9c now in this surprise drop at this stage when the analysts talked it up 20c does impact heavily on the budget.”
Next season’s forecast range at $$6.25-$7.25 is more palatable.
“I would much rather Fonterra under-promised and over-delivered and that’s where it looks as though we’re headed for next season.
“I would be more concerned if they came out at $7. Previously that would have happened so, really, this forecast now is cautious and prudent and I respect that.”
The advance rate is lower than McIntrye expected and will create cashflow problems.
“The advance rate at $3.80, based on $6.75, is a little less than expected and will affect my cashflow.
“I will have to have a chat with my bank manager.”
But it’s not the end of the world.
“It’s good milk prices. Anything at the mid $6 mark is good but having said that we need to get that to counter the increasing costs in running our farm businesses.”
Southland dairy farmer Simon Topham sees plenty to please him in Fonterra’s third quarter financial results.
While disappointed this season’s forecast payout is at the lower end of the range Topham is delighted the co-operative is taking decisive action on some business issues that have plagued its performance and lingered for too long.
“That is positive in my point of view.
“It is the basis of the dividend and where the business is at and needs to change, so it is good to see a move in that direction.”
Topham milks 500 cows at Hedgehope, southwest of Gore, and says the payout, while disappointing, is the mathematical quantum of international dairy prices and the exchange rate.
He is proud to be a Fonterra shareholder and supports the changes and the improved interaction with shareholders.
“They are definitely listening to their farmer shareholders,” he says.
His commitment to Fonterra and co-operatives in general was strengthened by attending this year’s My Connect conference run by the co-op and by the upheaval in overseas dairy markets and the state of the industry in Australia.
“NZ is in a positive position and I am grateful we have got a co-operative. We only need to look across the ditch at Australia and see farmers are struggling.”
