Milk price protection through hedging at farmers’ fingertips

Dairy farmers are to be offered Milk Price Protection through their Figured farm financial management platform, the largest in use by farmers and their accountants.

The MPP product, said Figured, can help manage milk price volatility and protect farm income.

Figured has teamed up with StoneX, a global agricultural risk management firm, to offer what it calls a locked-in minimum farmgate milk price with upside flexibility.

It works with a dairy Put Option managed by StoneX while Figured integrates the MPP solution into the individual farmers’ financial information, helping to make informed and personalised decisions, it said.

Less than 20% of New Zealand milk production is price protected.

Like an insurance premium, farmers pay up front to secure a minimum milk price for all or some of their production up to three seasons in the future.

If market prices fall below that level they are protected and compensated, whereas if prices rise they can still benefit.

Figured chief financial officer Chris Lowe said a milk price calculator enables farmers to explore options, speak with advisers, estimate premiums and compare market outcomes.

The cost of the MPP tool depends on market conditions, milk production volume and the chosen minimum price.

Farmers can fund their premium using Figured Lending and structure repayments to match cash flow.

To qualify and participate, farmers must be wholesale investors, which includes a requirement to have $5 million in net assets.

StoneX has over 400,000 retail clients and operates on 40 exchanges, including direct clearing with all dairy exchanges globally.

It has been involved with NZX dairy derivatives since 2010 when that exchange began.

Figured said it has focused on making the process accessible and user-friendly across its already huge field of partners and customers.

Figured is the largest financial management platform in NZ and Australia and has 6500 NZ dairy farms as customers, producing over a billion kilos of milksolids annually.

StoneX dairy derivatives broker Matt Manning, a Kiwi, said the structure of the NZ dairy industry, with Fonterra’s farmgate milk price benchmarking and Figured’s reach, make this MPP launch a worldwide pioneering event.

“What Figured offers by way of data and financial records, along with the modelling software, makes NZ an ideal place in which to offer price hedging.

“MPP works on the revenue side, while the Figured rural professionals help put all the costs and context in front of the farmer.”

He said the sellers of the Put Options that farmers are buying are existing institutional customers of StoneX, including some international dairy companies.

“In a nutshell, farmers are buying the option to sell at a certain milk price but not the obligation.”

Dairynews7x7 arch 5th 2025 by Hugh Stringleman in Farmers weekly