Fonterra Co-operative Group has lifted its share earning payout for its New Zealand farmers, but maintained the farmgate milk price (the net value of the product when it leaves the farm after marketing costs have been subtracted).
The New Zealand-owned dairy giant has kept its farmgate milk price forecast unchanged at $NZ4.25 per kilogram of milk solids, making the total forecast payout available to farmers for the season $NZ4.75 to $NZ4.85 per kilogram of milk solids.
It comes after Fonterra in May slashed its farmgate milk price by more than 10 per cent, shocking thousands of Australian dairy farmers. The company processes 17 per cent of Australia’s annual milk production.
Fonterra chairman John Wilson said this reflected performance improvements across the business, but acknowledged no change in the farmgate price of $NZ4.25 a kilogram of milk solids would mean another financially challenging season for farmers.
“The co-operative is aware of how tough the situation on-farm remains,” he said, as reported by The Australian.
“We are focused on delivering as much cash as possible to our farmers by bringing payments forward while maintaining a strong balance sheet. This forecast is our best estimate at this early stage of the season. We will continue to update our farmers as we move through the season.”
Fonterra has said the farmgate milk price forecast reflects the continuing global uncertainty and the high New Zealand dollar.
“The recent weakening of the euro, combined with the continued strength of the New Zealand dollar, has meant a price advantage for European export dairy products,” John said.
Global milk supply and demand is expected to come into balance throughout the course of this season, with farmers globally producing less milk.
Fonterra is forecasting a 3 per cent drop in its New Zealand milk collection this season.