This is a subscriber-only article
Fonterra has announced that it will hold its milk payout forecast at $6/kg milk solids plus 50-60c dividend (33.6c/l) for this season.
There were expectations that Fonterra would follow Synlait with a 25c increase, but recent increases in milk production – from a projected fall of 7% to a new estimate of a 5% drop – together with the 3.2% fall in prices at this week’s auction has led to Fonterra's decision.
John Wilson, chairman of Fonterra said the co-op is confident that this forecast is at the right level following the 75c increase (4c/l) in farmgate milk price last November.
He also said: “The global outlook for dairy remains positive. Since November, the global market for commodity dairy products has remained relatively balanced and we expect global prices to continue to hold, or gradually increase, over the back of this season – a view shared by analysts”
Fonterra will also increase its monthly advance payment to $4.85/kg (25 c/l) for February milk, which will help farmer’s cashflow.
Andrew Hoggard chairman of Federated Farmers welcomed the co-op’s decision saying it was better to be prudent than raising forecast prices now and having to lower forecasts later in the season.
SHARING OPTIONS: