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New Zealand dairy cooperative Fonterra optimistic after raising milk price forecast
July 28, 2017

New Zealand dairy cooperative Fonterra has welcomed growing confidence in the dairy industry, which prompted a NZD 0.25 ($0.19) increase in its milk price forecast.
The company increased its forecast farm-gate milk price for the 2018 season from NZD 6.50 ($4.89) per kilogram of milk solids to NZD 6.75 ($5.08).

Fonterra chairman John Wilson said the increase reflected ‘growing confidence on-farm’ across New Zealand, with global demand for dairy strengthening. “The signs [suggest] a good start to the season for our farmers and their rural communities, although [it follows] a challenging period of very wet conditions for some of our farmers,” Wilson said.

“The increased farm-gate milk price will be welcome news to farmers as they continue to invest in their businesses off the back of an improved 2016/2017 season, with the usual reminder to budget cautiously especially in the early part of the season.”
Fonterra chief executive Theo Spierings says the cooperative is well positioned to take advantage of improving demand for dairy nutrition across the ingredients, consumer and foodservice markets.

“Increasing numbers of consumers in our global markets prefer dairy for their everyday source of nutrition, and that is converting into strong demand – particularly in consumer and foodservice products.

“Our forecasts are prudent, given that we are still early in the season and we are starting with very low levels of inventory, and we are focused on continuing to demonstrate strong business performance so as to bring greater returns for our farmers.”

The comments will be a welcome vote of confidence, with the global dairy industry otherwise struggling amid falling demand from consumers.

The move away from dairy products has been motivated by the rise in popularity, and availability, of alternative milks like almond milk and coconut milk. Many shoppers are avoiding dairy as a lifestyle choice: recent research from the UK’s Food Standards Agency found that almost a fifth of 16 to 24-year-olds claimed to be intolerant to cow’s milk and dairy products, despite less than a quarter of those having had their intolerance diagnosed by a doctor.

In April, a charity warned consumers against cutting dairy out of their diet altogether, saying it could have a detrimental effect on bone health in later life.
A survey from the National Osteoporosis Society found that nearly a fifth of consumers aged under 25 had sought to reduce the amount of dairy in their diets, leaving consumers more vulnerable to breaks and fractures.



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