Smiles at farm gate for TasAg

By Phil Boeyen, ShareChat Business News Editor

Thursday 26th October 2000

Listed dairy farmer Tasman Agriculture is expecting group production to increase for the coming season despite having less productive land.

The company says favourable winter conditions have set a sound base with milk solids' production budgeted to rise 3% to 18 million kilograms for the milking season ending May next year, even though the company has sold eight of its properties in recent months.

Shareholders at today's AGM were told the company is also set to benefit from improved international dairy commodity prices which it says have strengthened considerably since January, especially for milk powder and other protein related products.

The rise is largely due to reduction in export subsidies, in line with WTO limits, and falling international stocks. Economic recovery in Asia and Latin America, together with increased purchasing power coming from oil producing nations in the Middle East, has also helped to push up prices.

Tasman Agriculture says the better prices have coincided with the continued fall of both the Australian and New Zealand currencies against the US dollar, which has boosted the prospects for future farm gate payouts. The company is now forecasting payouts in the vicinity of $4.40 per kilogram of milk solids in New Zealand and $3.15 per kilogram of milk solids in Tasmania.

Higher farm gate payouts are now being reflected in rising farm values and Tas Ag says if these conditions continue shareholders can expect a significant improvement in the underlying value of the company in the near term.

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