New Zealand dairy co-op Fonterra has lowered its 2022/23 farmgate milk price forecast as inflation hits consumer behaviour, softening global demand.
The cut in the forecast, announced at the end of last month, takes the price range down from NZ$8.75-$10.25 per kgMS to $8.50-$10. This reduces the midpoint of the range from $9.50 to $9.25 per kgMS. According to the co-op, the current advance payment rate of $5.70 per kgMS is unchanged.
This is a reversal on an announcement in June, when the co-op expected to pay a higher price to farmers for milk supply next year following an increase in dairy demand and a strong US dollar.
CEO Miles Hurrell said: “The change in the 2022/23 forecast Farmgate Milk Price will be disappointing for our farmers but it reflects a number of factors, including the recent downward trend in global dairy prices driven by some short-term softening in global demand, and the general impact of inflation on purchasing behaviour.
“However, we believe the longer-term outlook for dairy remains positive.”
Meanwhile, the co-op continues to seek new market opportunities, with a new business-to-business brand, Nutiani, launched to tap into the medical and everyday wellbeing nutrition markets – which are worth billions of dollars and are still growing.
Chief innovation and brand officer Komal Mistry-Mehta says the brand will help its business customers tailor their products to changing consumer needs.
“Our health and wellbeing customers are facing growing pressure to accelerate their innovation pipeline to respond to these dynamic consumer demands,” she added, “yet they face common challenges during new product development and are looking for partners to fill their capability gaps.
“Nutiani answers this need by providing a suite of solutions which help customers tackle the pain points associated with each step of the innovation journey – from identifying the opportunity to validating the final product.
“We see a clear opportunity to win in critical segments of the global wellbeing nutrition space. Fonterra’s deep expertise in nutrition science gives us an incredible advantage here.
“We will use Fonterra’s existing expertise in nutrition science to develop targeted solutions, while opening up opportunities for strategic partnerships to deliver access to new markets and consumers.”
Fonterra, which is due to publish its results for the year to 31 July on 22 September, is New Zealand’s biggest milk processor and the world’s biggest dairy exporter.