Saturday, May 31, 2008

Who's milking the economy?

More and more, milk is looking like liquid gold.

Thanks to a rise in Fonterra's payout forecast for the 2007-08 season from $7.30 to $7.90 a kilogram of milk solids, the average New Zealand dairy farmer will earn $790,000 this year from milk, before operating costs, interest payments and tax. (Fonterra is a global supplier of dairy ingredients that is co-operatively owned by more than 11,000 New Zealand dairy farmers.)

Although Westpac senior economist Doug Steel says every New Zealander will benefit, as more money is injected into a slow-to-negative economy, the supermarket shopper has little to rejoice about.

The price of milk - now about $3.25 for two litres - could rise, says Fonterra Brands managing director Peter McClure. "[But] butter and cheese won't go any further just now."

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