Tuesday, April 28, 2009

The Recession Is Over

For the dairy industry at least.

Today Fonterra increased the milk solids payout for the current season. Expect more to come.

"Powder prices on our global Dairy Trade platform have increased and our global sales team has made good progress in selling product at these improved prices. As a result, we now have the cautious optimism necessary to signal a modest but welcome increase in payout."

Those with eyes and ears have seen this coming for some time. The world cycle for dairy products started to trend upwards some months ago but there was little media comment. Fonterra cracked the Egyptian market recently and expects sales to China to triple in the near term.

You can be sure this will have been one of the reasons for PM John Key's optimistic assessment of our ability to come out of recession sooner, rather than later.

Astute watchers have been keeping a close eye on lamb prices as well. A typical 17kg lamb which would have fetched $60 last year is currently bringing $95 and is expected to sell for up to $120 next season. Some recession!

These things all mean prosperity for New Zealand about which Treasury had not the faintest idea when it issued it's gloomy predictions before Christmas.


homepaddock said...

"about which Treasury had not the faintest idea"

People who spend too much time in Wellington tend not to understand what's happening in the productive bits of the economy outside the city limits.

Cactus Kate said...

Hmm......look again Adolf at returns on investment.

Farming still has a pathetic yield. Especially with recently purchased farms at 2008 season prices.

The standard of Christmas present from Ma and Pa is unlikely to improve in '09

Adolf Fiinkensein said...

Cactus, the return on investment in 1967 was no different. That hasn't stopped people buying farms and becoming wealthy. Farmers don't pay tax on income. They pay debt.

Supply and demand for a scarce resource, my dear.

Productive land.

Anonymous said...

In any other country the farmer is a peasant.

Cactus Kate said...


Farmers are the biggest property speculators in the country.

They don't make money off the milk.

Anonymous said...

In any other country the farmer is a peasant.
We are a country of peasants; some peasants have bigger landholdings than others!

The single problem with NZ is that most of the lazy bludging peasants think that for some reason they can have a first-world lifestyle: and (unfortunately for the economy as a whole) gullible overseas bankers have been foolish enough to lend us the funds to have a lifestyle and economy far, far beyond our means.

(it's probably because - as Stephen Jennings said - when NZ was protected by the UK we had that standard of living due to a huge rort).

Well there aren't any gullible bankers any more: they're all bankrupt. And the non-gullible bankers aren't going to lend NZ any more money.

Now, frankly, we can barely pay for a lifestyle or health or education system as good as Chile. But we (and our leaders) keep kidding ourselves we can have a "first world" lifestyle.

Well we can't. Frankly, being a bar-tender in london contributes more to the global economy than being a farmer or lawyer in NZ!

The sooner we realize we cannot afford economic luxuries like the dole, the dbp, and especially the heath and education systems, the better off those few productive people in NZ will be able to enjoy the true rewards of their hard work!

baxter said...

Don't think there will be much competition from pork for a while either.

Adolf Fiinkensein said...

Yes baxter. The same thought had crossed my mind. On the other hand you need plentiful supplies of cheap food for all those socialists who don't want to earn enough to buy a feed of lamb or cheese.

BTW, beef prices as well have improved considerably.

When I get time I'll try and do some calcs to show how much and by what percentage our GDP will be improved by the price increases referred to in this post.