Richard McIntyre: Federated Farmers Dairy Chair on Fonterra's interim results, the dairy sector

Fonterra farmers are in line for a large payout on interim results. 

The co-op’s lifting its dividend to 22 cents a share, from 15 in the previous comparable period. 

It's reporting its first-half profit increased 8% to $729 million. 

Federated Farmers’ Richard McIntyre told Francesca Rudkin that for the first time in quite a while, he’s hearing farmers starting to talk about what they could or should invest in for their farms. 

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Episode Transcript

Speaker 1 (00:00):
It has been a brilliant week for our dairy farmers.
Fonterra has delivered a bumper first half result with net
profit up to seven hundred and twenty nine million dollars,
a dividend of twenty two cents a share will be paid,
and the midpoint milk price is still at ten bucks
a kilo. Chair Federated Farmers Dairy Industry Group, Richard McIntyre
is with us. Good morning, Richard, good morning. So is
the mood the vibe on the farm shifting to something

(00:22):
a little bit more positive?

Speaker 2 (00:25):
Yeah, farmers are, or dairy farmers are a lot more
optimistic at the moment. You know. Obviously we've got a
few that are going through a drought at the moment
in the Northoland, but a lot of it rain over
the last three days, which is sitting void spirits a
little bit in that respect. But look, you know, a
ten to a milk price is great. You know. The
fact that's becoming more and more certain is really really positive.
And we're hearing a lot of talk about attend to

(00:46):
a milk price for next season as well, which is awesome.
So the break even milk price is sitting at around
eight dollars fifty at the moment, so it's still really high,
but there's still a reasonable margin there for the average farmer.
A lot of talking about, you know, paying down some debt,
you know, a lot of accumulated some debt over the
last few years to paying that down, some deferred maintenance

(01:08):
or some capital projects. And probably you know, for the
first time in quite a while, I'm hearing a lot
of farmers starting to ask but a few questions and
talk about what they could or should invest in their
farm that will future proof it for the next ten
to twenty years. So you know, that is awesome.

Speaker 1 (01:24):
What is the answer to that?

Speaker 2 (01:26):
Look, it really depends on the farm and this situation.
You know, there are a lot of improvements that can
be made to I guess, focus on productivity and production.
There's there are approvements that can be made to reduce
greenhouse gas emissions or improved water quality, and it depends
on I guess the starting point for those farms and
whether low hanging fruit is first and foremost.

Speaker 1 (01:48):
This follows forecast this week of back to back good seasons,
which is quite unusual, isn't it? Can it last?

Speaker 2 (01:54):
Well, that's a really good question. So it is quite
rare to have a couple of good seasons in a row.
So often when you have a really good milk prices
because international milk prices are really high. And although we
although we produce a large proportion of the milk that
is traded across borders, we only produce a small proportion
of the milk that is produced in the wild, and

(02:16):
so a lot of the other producers in the world
actually just ramp up production when prices are high, and
often they overshoot a little bit and oversupply the following
year at the milk price jobs, so we've always going
to be really aware of that. You know, these productions
for next year great, but there is a chance that
the milk price might drop still and.

Speaker 1 (02:33):
You're all concerned about the global economic instability at the moment.

Speaker 2 (02:40):
Look, I think everyone's a little bit worried about where
that might go this and there a little bit of uncertainty.
But you know the other side of it is in
New Zealand produces really good, safe food and you know
it's well with grass feed. It's sought out throughout the world,
and so you know, we typically get a bit of
a premium for that. So in any sort of trade

(03:01):
wards or anything like that, you know, typically we'll still
have people that we want to buy, all countries that
we want to buy milk product. So last time, you know,
Trump gotton, we had all that talk about tariffs, etc.
What really happened was that Mexico decided that they really
wanted our milk products over over America's and we set

(03:23):
and sold a hold of milk fare. So that's yeah, yeah,
we create opportunities as well.

Speaker 1 (03:29):
Thank you so much for your time, Richard McIntyre. For
more Familily Edition with Ryan Bridge, listen live to news talks.
It'd be from five am weekdays

Speaker 2 (03:38):
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