Terrible news for the 523 Fonterra workers who are losing their jobs – I’m sure everyone here at The Standard wishes them well.
Fonterra axes 523 jobs in a bid to cut $60m in costs
Fonterra has cut 523 jobs as the company tries to reduce its payroll bill by up to $60 million a year.
Chief executive Theo Spierings said the news had been unsettling for the people affected but the co-operative had to change if it was to remain strongly competitive in the global dairy market.
Speaking of the global dairy market:
Kiwi dollar falls as dairy prices plunge at latest auction
The latest GlobalDairyTrade auction was a shocker, the GDT price index dropping by 10.7 per cent from the last sale a fortnight ago and with wholemilk powder prices registering their biggest fall in 12 months
Whole milk powder – which is responsible for about 75 per cent of Fonterra’s farmgate milk price – fell in price by 13.1 per cent to US$1,848 a tonne to its lowest level in six years.
AgriHQ dairy analyst Susan Kilsby said the auction result was “disastrous”. “Farmers now face two consecutive seasons of extremely low milk prices,” she said in a commentary. “The majority of farmers can’t break-even at such a low milk price.”
Economists estimate a $1/kg drop in the milk price equates to about $2 billion less income for dairy farmers. “Farm debt levels will rise. Rural communities will suffer as farmers reduce spending to the bare essentials,” Kilsby said. …
The current job losses may well be just the beginning.