May 7, 2025 • 5 mins
With milk price volatility presenting a persistent challenge for New Zealand dairy farmers, the Findex head of agribusiness urges farmers to embrace hedging strategies to protect their income. With a range of hedging tools now available and accessible, he says farmers today have no excuse not to consider managing milk price risk.
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Speaker 1 (00:00):
As a bloke, I always enjoyed catching up with over
a good George at Field days. His name is Hayden Dylan.
He's the head of agri business for Findex. Now, Hayden,
you've been out recently in the media saying farmers or
you're urging farmers to embrace hedging strategies to protect their income,
especially dairy farmers, because there are so many options out there.
(00:22):
I note that the future's price as of the good
GDT yesterday is up to nearly ten dollars for next season.
You're urging farmers to lock some of that stuff.
Speaker 2 (00:31):
In good athen Jamie, not necessarily telling people to lock
I guess the pitch we've got is that we're very
blessed now to have a lot of access to products
that allow farmers to huge the milk price. And the
flip side of that is, if we see it, we've
got huge volatility with our markets and everything else. Just
thought the Trump the Trump syndrome at the moment. But
(00:55):
you know, we're looking at some good payouts next year,
well above everyone's bake Evans. There's a real opportunity to
start hedging you your milk price at that with different
products if we do see a collapse and price and
I'm not suggesting we will or there's going to be well,
but no one can really tell what the set is
going to be. The point being that we've probably got
use if we are into a loan price next year
(01:18):
of the year after and we haven't taken advantage of
those opportunities, particularly if we're really susceptible to a lower.
Speaker 1 (01:23):
Parts Hayden Dylan with us from Findex. I call it
the sleep at night test. I'm involved in a dairy partnership,
don't always agree with the other equity shareholders, but I'm
a big fan of a fixing milk price and be
fixing interest rates. There are two of the variable costs
that you can lock in.
Speaker 2 (01:42):
Yeah, agreed, And I think that for me, the test
is what will cost you more, because if you take
a hedge, it's a trade off, it's it's an economic
trade off. Your your buying certainty for a cost to
avoid uncertainty. And if the milk price going lower than
your break even, there's going to cost you more and
hurt you more than missing out on some upside. Then
(02:04):
the short answer is you should be looking at a
hedging policy. And a hedging strategy.
Speaker 1 (02:09):
There are options through the likes of Fonterra and Open
Country Dairy are two biggest dairy companies. They offer fixed
price offerings and I know our good mates Mike McIntyre
Jardin they do the ENZX trading. But there are plenty
of options out there.
Speaker 2 (02:25):
Yeah, and look, Jarden have been the leaders on this
and marking. The team have done an amazing job, so
you know, full credit to them. They're really they've created
this market for farmers in New Zealand. But you'll see
Figurative come out with a product. They've linked up with
a group in the UK so you can actually got
through their software and buy it put just since you
buy for lack of a better word, and insurance pem
(02:46):
them for your milk price for the following year. So
there's no shortage of options for farmers and no shortage
of products they can use. Well, I think we're Trumper
says they're there for you to use. But every product
has a little bit of its own nuance. Every strategy
needs to be considered in light of where you'll break
even as where the current marketers and what products you
use and how you enter into those products. So there's
(03:09):
actually quite a bit at a high level. It's really
simple enough that what you're trying to achieve, I guess
when you break it down into how you enter into
those products and what you use, there is quite a
bit of thought to be applied around how you do
that to get what's best for you and something that
you can understand and like you said, sleep well at night.
Speaker 1 (03:26):
Yeah. Well, obviously the simplest way is if you're supplying
the likes of Fonterra or Open Country Dairy, you would
just use their product one.
Speaker 2 (03:34):
Hundred stand so if you want to, it's not as liquid,
So you get the option and you go on there
with Fonterra and you take some fixed milk, and that's great.
But you might be looking at the market and deciding
that there's better liquidity for you to take some futures
through the Jarden team, or are even looking at some
zero cost collars, or you might be buying put through
(03:54):
them rather than taking a fixed price at a certain time.
So it might be a combination of the boat as well.
And I think that's where I'm getting some good advice
around putting together a hdging strategy, around opening yourself up
to all those products and working out what you're trying
to achieve, trying to average yourself into your hedging strategy
(04:15):
and then having a consideration for what products work at
watchtos at what times.
Speaker 1 (04:19):
Just to finish on findex of course, the artist formerly
known as crow Hal it's one of the biggest accounting
practices in the country. You're dealing with a lot of
farmers books. How are they looking this season?
Speaker 2 (04:29):
Yeah, pretty good, really good, to be honest, Well, we've
actually had some pretty good years. They've noticed the difference
from the White Kadow guys do have a higher cost structure,
and we're to take the other end of the country
of the Southland guys have probably benefited further, you know,
with a lower cost structure. The seasons have been pretty tough,
like you've had a flip side on seasons. Spring was
(04:50):
brutal down on south and they're great for Dutch heading,
whereas Whitecatow had an amazing spring and then a pretty
brutal autumn. So it all tends to have itself out.
But overall, Garin's going pretty well, sheeting beat's going pretty well,
interest rates coming down, you know, we're shaping up pretty well.
Speaker 1 (05:08):
We're about to hit the sweet spot. Let's hope so
Findeck's head of agribusiness, Heighten Dylan, see you at Field Days.
Speaker 2 (05:15):
Looking forward to it. Damien's chest
As a bloke, I always enjoyed catching up with over
a good George at Field days. His name is Hayden Dylan.
He's the head of agri business for Findex. Now, Hayden,
you've been out recently in the media saying farmers or
you're urging farmers to embrace hedging strategies to protect their income,
especially dairy farmers, because there are so many options out there.
(00:22):
I note that the future's price as of the good
GDT yesterday is up to nearly ten dollars for next season.
You're urging farmers to lock some of that stuff.
Speaker 2 (00:31):
In good athen Jamie, not necessarily telling people to lock
I guess the pitch we've got is that we're very
blessed now to have a lot of access to products
that allow farmers to huge the milk price. And the
flip side of that is, if we see it, we've
got huge volatility with our markets and everything else. Just
thought the Trump the Trump syndrome at the moment. But
(00:55):
you know, we're looking at some good payouts next year,
well above everyone's bake Evans. There's a real opportunity to
start hedging you your milk price at that with different
products if we do see a collapse and price and
I'm not suggesting we will or there's going to be well,
but no one can really tell what the set is
going to be. The point being that we've probably got
use if we are into a loan price next year
(01:18):
of the year after and we haven't taken advantage of
those opportunities, particularly if we're really susceptible to a lower.
Speaker 1 (01:23):
Parts Hayden Dylan with us from Findex. I call it
the sleep at night test. I'm involved in a dairy partnership,
don't always agree with the other equity shareholders, but I'm
a big fan of a fixing milk price and be
fixing interest rates. There are two of the variable costs
that you can lock in.
Speaker 2 (01:42):
Yeah, agreed, And I think that for me, the test
is what will cost you more, because if you take
a hedge, it's a trade off, it's it's an economic
trade off. Your your buying certainty for a cost to
avoid uncertainty. And if the milk price going lower than
your break even, there's going to cost you more and
hurt you more than missing out on some upside. Then
(02:04):
the short answer is you should be looking at a
hedging policy. And a hedging strategy.
Speaker 1 (02:09):
There are options through the likes of Fonterra and Open
Country Dairy are two biggest dairy companies. They offer fixed
price offerings and I know our good mates Mike McIntyre
Jardin they do the ENZX trading. But there are plenty
of options out there.
Speaker 2 (02:25):
Yeah, and look, Jarden have been the leaders on this
and marking. The team have done an amazing job, so
you know, full credit to them. They're really they've created
this market for farmers in New Zealand. But you'll see
Figurative come out with a product. They've linked up with
a group in the UK so you can actually got
through their software and buy it put just since you
buy for lack of a better word, and insurance pem
(02:46):
them for your milk price for the following year. So
there's no shortage of options for farmers and no shortage
of products they can use. Well, I think we're Trumper
says they're there for you to use. But every product
has a little bit of its own nuance. Every strategy
needs to be considered in light of where you'll break
even as where the current marketers and what products you
use and how you enter into those products. So there's
(03:09):
actually quite a bit at a high level. It's really
simple enough that what you're trying to achieve, I guess
when you break it down into how you enter into
those products and what you use, there is quite a
bit of thought to be applied around how you do
that to get what's best for you and something that
you can understand and like you said, sleep well at night.
Speaker 1 (03:26):
Yeah. Well, obviously the simplest way is if you're supplying
the likes of Fonterra or Open Country Dairy, you would
just use their product one.
Speaker 2 (03:34):
Hundred stand so if you want to, it's not as liquid,
So you get the option and you go on there
with Fonterra and you take some fixed milk, and that's great.
But you might be looking at the market and deciding
that there's better liquidity for you to take some futures
through the Jarden team, or are even looking at some
zero cost collars, or you might be buying put through
(03:54):
them rather than taking a fixed price at a certain time.
So it might be a combination of the boat as well.
And I think that's where I'm getting some good advice
around putting together a hdging strategy, around opening yourself up
to all those products and working out what you're trying
to achieve, trying to average yourself into your hedging strategy
(04:15):
and then having a consideration for what products work at
watchtos at what times.
Speaker 1 (04:19):
Just to finish on findex of course, the artist formerly
known as crow Hal it's one of the biggest accounting
practices in the country. You're dealing with a lot of
farmers books. How are they looking this season?
Speaker 2 (04:29):
Yeah, pretty good, really good, to be honest, Well, we've
actually had some pretty good years. They've noticed the difference
from the White Kadow guys do have a higher cost structure,
and we're to take the other end of the country
of the Southland guys have probably benefited further, you know,
with a lower cost structure. The seasons have been pretty tough,
like you've had a flip side on seasons. Spring was
(04:50):
brutal down on south and they're great for Dutch heading,
whereas Whitecatow had an amazing spring and then a pretty
brutal autumn. So it all tends to have itself out.
But overall, Garin's going pretty well, sheeting beat's going pretty well,
interest rates coming down, you know, we're shaping up pretty well.
Speaker 1 (05:08):
We're about to hit the sweet spot. Let's hope so
Findeck's head of agribusiness, Heighten Dylan, see you at Field Days.
Speaker 2 (05:15):
Looking forward to it. Damien's chest
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