Help Your Clients Manage Milk Price Risk Proactively

Milk price volatility is nothing new to New Zealand dairy farmers. In fact, the only constant is change. Fluctuations aren't just seasonal, they can swing dramatically within a single season, creating uncertainty around margins and making farm financial management challenging.

Did you know that over half of the average dairy farm's financial risk comes from the milk price itself? Despite this, only 15% of total milk production in New Zealand is protected from price swings. Compared to other global dairy markets like the U.S., where protection is as high as 70-80%, our dairy farms are significantly exposed.

How Do Farmers Currently Manage Milk Price Volatility?

Currently, most New Zealand dairy farmers manage fluctuations in milk prices by adjusting their cost structures. Typical responses include:

• Reducing Operating Costs: Cutting expenses on farm inputs and daily operations.
• Restructuring Debt Facilities: Adjusting loan arrangements, such as shifting from principal-and-interest repayments to interest-only, to improve cash flow.
• Deferring Investments: Postponing capital projects or equipment upgrades to preserve cash reserves.
• Delaying Repairs and Maintenance: Putting off necessary maintenance activities, which can impact productivity in the longer term.

These responses can provide short-term relief but often have long-term implications, potentially affecting farm sustainability and productivity. This approach highlights the need for more proactive, income-focused strategies to manage milk price risk effectively.

Why Aren't Dairy Farmers Protecting Their Milk Price?

Several factors have traditionally held farmers back from adopting price protection strategies:

• Lack of Understanding: Complex financial products can be intimidating.
• Cost and Cash Flow Concerns: Many farmers worry about upfront costs,  or hidden and uncertain fees.
• Fear of Missing Out: Locking in a price might mean missing potential higher payouts if prices rise.
• Accessibility and Guidance: Farmers often aren't sure where to start or who to trust for independent advice. 

Fonterra’s Response: Raising Awareness in the Market

Recognising the growing demand for price certainty, Fonterra recently announced expanded milk price protection options effective from June 2025, including Extended Fixed Milk Prices, Minimum Milk Price Options, and Minimum-Maximum Price Ranges.

However, Fonterra’s offerings remain limited, capped at 10% of total milk production (up to 50% per farm). 

With Fonterra investing in more milk price protection products, we anticipate increased education and market awareness, driving a fundamental shift from New Zealand dairy farmers being passive price-takers to proactive managers of their milk price risk. 

As this shift occurs, farmers will naturally seek out complimentary, flexible tools to manage the milk price volatility.

Enter Figured Milk Price Protection in Partnership with StoneX

Understanding this need, Figured and StoneX have joined forces to deliver a milk price protection solution built specifically for New Zealand’s farming environment. Figured Milk Price Protection allows dairy farmers to lock in a minimum milk price, offering more certainty and confidence when planning through volatility.

What sets this solution apart is the combination of StoneX’s global expertise in commodity risk management with Figured’s intuitive farm financial planning platform. Rather than being a standalone product, Milk Price Protection is integrated directly into the planning process, making it simple to understand, easy to access, and available right where financial decisions are already being made.

Here's how it works:

• Secure a Minimum Price: Your client pays a single upfront premium to secure a minimum price for upcoming milk production.
• Protection Against Price Drops: If the market price falls below the secured minimum, they’ll receive the difference.
• Flexibility to Benefit from Price Rises:  If prices rise above the minimum, your client still receives the full market payout.

• Protect as Much or as Little as They Want: Clients can choose the volume of production they want to protect, giving them control and flexibility to suit their strategy.

Simplifying Protection, Planning, and Payments

Milk Price Protection Integrates seamlessly with the planning processes you already use with your clients. You can model scenarios directly within their farm data, clearly visualising the impact of price fluctuations and helping them understand their true breakeven. If upfront costs are a concern, flexible financing options are available to spread premium payments in a way that aligns with the farm’s cash flow.

To ensure the smoothest experience, Figured simplifies the onboarding process:

• Streamlined application process embedded in your existing Figured platform
• Free LEI (Legal Entity Identifier) registration for your first year
• Options to spread premium payments with Figured Lending.

Incorporating Risk Management into Your Planning Services

As an accountant working closely with dairy clients, your strength lies in helping them clearly understand their financial position and explore strategic options. While you’re not providing specific financial advice, your role naturally involves presenting your clients with comprehensive financial insights and helping them evaluate various opportunities to protect and grow their business.

When it comes to Milk Price Protection, you’re not advising your client on whether or not to take up protection; instead, you’re clearly outlining the option, its potential benefits, and how it fits within their broader financial plans

Milk Price Protection in Figured enables this strategic conversation, allowing you to comfortably integrate risk management into your regular planning discussions. Here’s how you can seamlessly approach this:

• Clarify Client Goals: Start by revisiting and clearly documenting your client’s broader business objectives and their comfort level with financial risk.
• Identify Break-even Points: Utilise Figured’s Milk Price Calculator  to visually demonstrate each client’s breakeven milk price. This helps clients easily understand the impact of potential price movements.
• Assess the Risk Profile: Work together to evaluate how exposed their farm is to milk price fluctuations.
• Present Protection Options Clearly: Outline the available Milk Price Protection options, showing how each could align with your client’s stated objectives and risk preferences. 

By incorporating these conversations into your planning discussions, you reinforce your role as a trusted partner, providing clarity, facilitating informed decision-making, and empowering clients to confidently navigate market volatility.

From Uncertainty to Confidence

Milk Price Protection challenges the uncertainty dairy farmers have traditionally accepted as part of farming. With Figured Milk Price Protection, you can help them bring price certainty into their planning conversations. 

Special Offer: If your client isn’t already using Farm Manager, they’ll receive 3 months free when they lodge their first Milk Price Protection application. Plus, Figured covers their first year’s LEI registration (valued at $95).

Want to introduce this to your clients?
Get in touch to find out how we can support you in starting the conversation.

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