February 27, 2014

Fonterra raises farmgate milk price forecast for 2013-14 season

For the 2013-14 season, Fonterra Co-operative Group Limited lifted its forecast Farmgate Milk Price by US$0.35 to a record level of US$8.65 per kilogramme of milk solids (kgMS) of which the increase, along with a previously announced estimated dividend of US$0.10/share, amounts to a forecast cash payout of US$8.75.

Chairman John Wilson said the higher forecast was good news for farmers, and for New Zealand.

"Last December, the Board approved a forecast Farmgate Milk Price that was US$0.70/kgMS below the Farmgate Milk Price that had been calculated in accordance with the Milk Price Manual. We are maintaining this position, with today's forecast being US$0.70 lower than the US$9.35 Milk Price derived under the Milk Price Manual. The Board has the discretion to pay a lower Farmgate Milk Price than that specified under the Manual, if it is in the best interests of the Co-operative," said Wilson.

The Board has also approved an increase in the Advance Rate schedule of monthly payments to farmer shareholders. Payments from March through June will be US$0.25/kgMS higher than the previously published schedule.

Fonterra is required to consider its Farmgate Milk Price every quarter as a condition of the Dairy Industry Restructuring Act (DIRA). 

Fonterra is a global leader in dairy nutrition and the preferred supplier of dairy ingredients to many of the world's leading food companies. The farmer-owned New Zealand co-operative is the largest processor of milk in the world, producing more than two million tonnes of dairy ingredients, value added dairy ingredients, specialty ingredients and consumer products every year.