Fonterra needs to get its forecast right – Nathan Guy

Rural Exchange 15/09/2018

All eyes are on Fonterra after it was announced the co-operative took a financial hit this year, with a $196 million net loss.

Experts say that financial turmoil was evident before the announcement, and hope New Zealand’s largest company can turn things around for the better.

“This is rock bottom for Fonterra and you’d hope at least that the only way is up,” said Nathan Penny, senior rural economist at ASB.

National’s agriculture spokesman Nathan Guy suggests Fonterra’s biggest challenge going forward will be providing farmers with accurate forecasting.

“That’s one of the key things they need to get right. And farmers will be looking for them to get that right in the future.”

While Fonterra’s 2018-19 forecast is $6.75 per kgMS, Mr Penny says ASB’s forecast is slightly lower at $6.50.

“But at this stage in the season, it’s looking positive. The New Zealand dollar in particular is helping. And global markets are reasonably balanced.”

Fonterra’s loss is the first in its 17-year existence, with the loss largely attributed to its $232m legal pay-out to French food company Danone and $439 write-down on its Beingmate investment in China.  

Fonterra paid only one 10c dividend to farmers in April, a move that Federated Farmers said “blindsided” dairy farmers across the country.

Watch the full interviews with Nathan Penny and Nathan Guy above.

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