Fonterra Chairman Sir Henry van der Heyden warned New Zealand dairy farmers to shore up their businesses against likely future volatility. He said, "Our future as dairy farmers in New Zealand, our international competitiveness and this country's future - it all depends on how we respond to the more volatile markets".

He added that Volatility is a fact of life and the farmers should better get used to it and those who don't do so, might find it tough going in this new world.

It was expected that Global dairy consumption growth will recover 2% by the end of this year. He shared that strong demand means that prices should remain well ahead of long-run averages, but with much more volatility.

The increasing month-to-month changes of milk powder prices are a clear indication of volatility. The monthly price fluctuations in 2006 were around plus or minus $US50 a tone, but now-a-days, farmers often saw movements over $US500 a tone.

Sir Henry said, "For farmers it's hard to budget and get the most out of your farm when you have to factor in plus or minus $NZ2 per kilogram of milksolids".