Karl Dean: Federated Farmers Dairy Chair on Fonterra's profit

Dairy farmers remain mindful of the chance of more tough times ahead. 

Fonterra's confirmed a final farmgate milk price of $10.16 for the past season, with earnings of 71 cents per share. 

But its midpoint forecast for this season remains at $10. 

Federated Farmers Dairy Board Chair Karl Dean told Francesca Rudkin farmers will be paying off debt and investing back into their farms after battling several years of high on-farm costs. 

He says they all understand costs may rise again, and incomes may drop. 

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Episode Transcript

Speaker 1 (00:00):
Right, farmers are getting a record payday. Fonterra has delivered
one of its best results ever, with a net profit
at one point I wait billion dollars shares, a jump
to just over six dollars, the high since twenty and eighteen,
and shareholders get a record divid in a fifty seven
cents a share. Carl Dean, the Federated Farmer's Dairy Terror
is with me now. Good morning, Thanks for your time, Carl,

(00:21):
Good morning, record record results across the board. How have
you the farmers today?

Speaker 2 (00:28):
I think fathers are pretty esthetic about hearing a strong
farm rate nook price as well as a very strong dividend.

Speaker 1 (00:37):
Like you said, where will that money go with their
investments that need to be made or debt to pay down.

Speaker 2 (00:44):
I think it's very important to realize that deer farmers
actually haven't had very a great rate of return or
a great profit with the high on farm costs the
last two to three seasons. So a lot of us
is probably going back into bank, back into paying do
some capital projects that have been put on hold for

(01:06):
the last couple of years, all those sort of things
that we like to do. You know, we only have
the opportunity to do it for a couple of years.
When they're doing there is actually profit made. More importantly, yes,
there will be some obviously some tasks even for the government.

Speaker 1 (01:22):
Hence we all benefit. Right. Do you think farmers will
also store some of that money away for a rainy
day rather than sort of having a wild time at
field days next year?

Speaker 2 (01:33):
I think most farmers. You know, we've been around around
quite a while, I suppose, and we know that there's
not normally two record payouts.

Speaker 1 (01:44):
Right.

Speaker 2 (01:45):
The last time there was a record, then there was
a quite a significant drop the following season. So sometimes
there's things that are one off. Sometimes they might stay
out for two seasons, but normally it does.

Speaker 1 (02:00):
I'm down again, so expectations are in check. How much
is Fontierra kept for itself, Carl.

Speaker 2 (02:09):
I don't believe frontiers information outside. I haven't seen any information.

Speaker 1 (02:19):
On that was under the impression that they had kept
a substantial amounts themselves, which I was just wondering, you
know how if that's the right decision given the current
economic and trade out lockes.

Speaker 2 (02:33):
Yeah, I think they have obviously get some of the
earnings per year about stained eighteen cents, and then they
are obviously going to if the divestment went through, there's
mony of that that would stay in the corporative as well.

Speaker 1 (02:50):
Someone made a comment in the newsroom, gosh, you know,
do you think that there might be a little bit
of angst from regular Kiwi's doing it tough, that they'll
see this great result and get jealous, And I thought,
I don't think so. We all will benefit from the
start with Carl, farmers are at the forefront of our
economic recovery.

Speaker 2 (03:06):
Yes, well, I've said that at the end of the day,
profit means tax. That's probably the key thing that people
have to realize is when farmers are making a profit,
that means that the text takes heart and that all
helps when it comes to devetments able to spend money.

Speaker 1 (03:25):
So in summary, Carl, farmers are ecstatic today, but they're
being cautious and you know about about the future. Pretty
much sums it up.

Speaker 2 (03:36):
Yes, yes, we all are under the understanding that, yeah,
costs may come up again and income they drop.

Speaker 1 (03:46):
Carl, good to talk to you. Thank you for your
time this morning. That was Federata Farmer's Dairy Chair. For
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