Lower milk price means lower input costs for the added value products and bigger profits for the FSF holders. In theory.
possibly in actuality this time .... We shall see
Fonterra increased its guidance for earnings per share to between 40 cents and 50 cents, ahead of the market's expectations of about 36 cents per share.
Fonterra are milking N.Z. customers for dairy products at a retail level. Its an absolute disgrace that milk cheese and other products are still priced so high.
Fonterra are milking N.Z. customers for dairy products at a retail level. Its an absolute disgrace that milk cheese and other products are still priced so high.
To give you an idea. Under DIRA rules, Fonterra must sell milk to independent milk processors at cost. Based on $3.85 + transport cost gives a per litre price (delivered to your factory) of 39 cents. Processing, packaging, delivery & profit on drinking milk is additional. But 1 litre of milk going into the factory = 1.1 litres drinking milk + some cream coming out as finished goods
The domestic market generally yields the best return as imports have a huge cost disadvantage. So we just have to put up with the situation.
But it is not just Fonterra "milking it", the big retailers make plenty. Ask yourself how the corner dairy can sell milk at a cheaper price than the major supermarket chains. Do you think the dairy could sustain milk as a loss-leader. No chance
Guy at work used to work for Fonterra. Some of the retailers would turn over their fresh milk chillers 55-60 times before they had to pay for the first bottle.....
the retailers determine retail price and they make many more x the margin than the 5% or less they like to quote in the media for milk
Correct.
And the supermarket's combined statement last Friday that their purchase pricing won't change until October (so they can't possibly pass on any savings until at least then) is utter rubbish. October doesn't align with any contract period options that are available......
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