has lowered its forecast milk payout for the current season by a
further 10 cents per kilo of milk solids, bringing it down to $4.40 a
kilo, with a dividend of 20 to 30 cents per share on top of that.
has also announced an opening milk price for the new season, starting
in June, of $5.25 a kilo, well below the current season's opening
price of $7.
latest drop in this season's payout forecast comes only a month after
it reduced the price from $4.70 to $4.50, driven by the continuing
decline in international dairy prices.
the latest price adjustment turns out to be the final figure for the
season, it means farmers supplying Fonterra will be getting not much
more than half of what they got in the 2013/14 season, when Fonterra
paid out a record $8.40 a kilo for its milk.
co-operative will confirm the final price for the 2014/15 season
later this year.
chairman John Wilson, left, and chief executive Theo Spierings at a
press conference in 2014. Photo: RNZ
/ Kim Baker Wilson
chairman John Wilson said the revised forecast reflected the reality
that global commodity prices had not increased as expected.
markets are over-supplied with dairy commodities after farmers
globally increased production in response to the very good prices
paid 12-18 months ago," he said in a statement annoucing the
changes this morning.
supply imbalance has heightened due to continuing good growing
conditions in most dairy producing regions."
said the opening $5.25 milk price forecast for the next year was
based on Fonterra's best view of long-term global dairy supply and
can expect prices to recover going forward, and to see a rebalancing
of supply and demand over the season," he said.
it is more difficult this early in the season to determine exactly
when this recovery will lead to a sustained price improvement."
Chief Executive Theo Spierings said prices could fall further.
real concern for me is key importing regions like China, Russia,
Middle East, Africa - when are they really back into the markets?
it's more of an amount issue than a supply issue in my opinion."
said he was still confident about the long term prospects for the
Farmers national dairy chair Andrew Hoggard, who is a Fonterra
supplier in Manawatu, said the further drop in the current season's
payout would come as a surprise for most farmers, although the
opening forecast for next season was in line with most people's
said it meant the monthly advance payments to farmers for the new
season would start at about $3.60 a kilo and wouldn't top $4 until
February next year.
said that was going to mean a second successive season of extremely
tight cash flows for farmers. Some were already running at a loss at
this season and would have to take on extra short-term borrowing to
get them through the next year.