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Speaker 1: Now Fonterra's warning farmers to expect lower earnings next year

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Speaker 1: with global production now outstripping demand. The co op is

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Speaker 1: already lowering its forecast or has already to nine and

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Speaker 1: a half nine dollars fifty paquilo of milk solids. John Stephenson,

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Speaker 1: is the Fonterra Cooperative Council chair, is with us.

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Speaker 2: Morning John, Good morning Heather.

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Speaker 1: Now what is going on here that everyone, the Big

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Speaker 1: seven is producing so much milk at the moment?

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Speaker 2: I think sort of commodity prices are a reflection of

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Speaker 2: global supply and demand, and in the strong prices we've

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Speaker 2: seen over the last twelve months have driven a supply response.

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Speaker 2: So it's something that we've seen before. But for us

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Speaker 2: as farmers, obviously that that impete on prices is not

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Speaker 2: something that we're so happy about.

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Speaker 1: Yeah, this increase in production from the Big Seven, Is

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Speaker 1: this a blip or is this the new normal? They

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Speaker 1: will hold it at this level.

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Speaker 2: I think, you know, So we've certainly seen really historically

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Speaker 2: strong prices, so it's not surprising to see that supplier response.

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Speaker 2: Have also seen relatively low feed prices as well. So

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Speaker 2: those overseas systems that rely more on important feed than

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Speaker 2: the grass systems we run here. They've got the ability

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Speaker 2: to respond pretty quickly. So I mean the cure for

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Speaker 2: higher prices can be higher prices because of that demand

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Speaker 2: response or the supply response and the effect that he's

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Speaker 2: on demand. So hard to say either, but you know

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Speaker 2: we'll certainly be keeping a closer untimes.

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Speaker 1: Now you're talking there about the full cast payout, which

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Speaker 1: isn't isn't outstanding for the farmers. I saw somewhere. You

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Speaker 1: could correct me if I'm wrong, but I thought I

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Speaker 1: saw somewhere that we will be back to twenty five levels,

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Speaker 1: which were records in about three years or so. Is

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Speaker 1: that right?

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Speaker 2: Again from a farmer's perspective, it's really hard to say

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Speaker 2: than others, But yeah, certainly we would hope to see

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Speaker 2: a return to those strong prices. But in saying that,

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Speaker 2: you know we are at the wim of those global

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Speaker 2: markets and supply and demand. It's basically as simple as

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Speaker 2: that either.

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Speaker 1: Yeah. Now, got to talk about Butter, John, because you

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Speaker 1: know I'd be shot if I didn't. I see the

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Speaker 1: price of Butter's come back nine percent on the markets.

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Speaker 1: What's it doing at retail?

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Speaker 2: Has it followed, and there's always a bit of a

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Speaker 2: leg on both the upper and the downward side. You know,

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Speaker 2: obviously the supplies of milk and the products that we

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Speaker 2: can make out of milk. Gairy farmers like to see

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Speaker 2: strong prices. But you know, butter, we've seen what's happened

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Speaker 2: in the global dairy trade, so you know is if

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Speaker 2: that continues, expectations would be to see that they'd impact

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Speaker 2: on our store shelves.

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Speaker 1: John, thank you very much for your time, look after yourself,

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Speaker 1: have a good day. That's John Stephenson, Fonterra Cooperative Council Chair.

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