Fonterra has confirmed that the Guaranteed Milk Price (GMP) for the 2013/14 season pilot will be NZ$7.00 per kgMS (kilogram of milk solids), following the announcement of its opening Milk Price forecast for the season.
Earlier this year the co-operative announced a GMP pilot programme allowing farmers to lock in a milk price announced at the beginning of a season for up to 75 per cent of their milk supply. With what it says is strong interest shown from farmer shareholders, Fonterra is looking for around 200 farms to take part.
Fonterra’s director of commodity risk and trading, Bruce Turner, said ideally they are looking for a broad base of farmers who are at different stages of their farm’s operations, have varying herd sizes and are located across the country.
“The $7.00 GMP will allow farmers who require greater certainty for their farming business to better plan for the full farming year, knowing exactly how much money they will receive for a set portion of their milk supply.”
The pilot programme was developed to give farmers greater certainty but also more options in how they structure their business, said Turner.
“As part of our Co-operative principles we’re always looking at ways we can better support our shareholders. We will monitor the pilot over the next season and provide feedback to all shareholders on the benefits and the risks and this way farmers can see if it is something that might suit them in the future.
“We recognise that every farming business is different. And while most farmers can live with the market volatility, there are times when some farmers would prefer more certainty as it would help them manage their own farming businesses.”
“Certainty can be particularly important for farmers at times when they are considering investing in new equipment, expanding or undertaking a new conversion. It’s a bit like having a fixed interest rate on your mortgage versus a floating rate. It enables you to know exactly where you stand with a percentage of your production and this can help with future planning.”
“The pilot programme also provides the Co-operative with strong certainty. This is because it allows us to lock in contracts with customers at a set price, so that we can make sure we have the right margins so there is no impact or risk if there is a fall in prices.”
