September 12, 2006

Fonterra told to beef up performance and improve value-added returns

A dairy farmers' representative said Fonterra's poor returns are unacceptable and it would have to increase farmers' milk payments if it's to retain its suppliers.

The Fonterra Shareholders' Council has issued a critical annual report saying the co-operative should be performing better.

The council, which acts as the watchdog body for the company's farmer shareholders, says last season's payout of US$4.10/kg was the second-lowest milk payment in the company's five-year history.

It says the value-added component, 25 cents, contributed less to farmers' returns than in Fonterra's first year of operation.

Dairy Farmers of New Zealand deputy chairman Lachlan McKenzie says Fonterra has to ensure that returns from dairy farming has to be higher if it wants to keep its suppliers.

Statistics New Zealand says the country's terms of trade unexpectedly rose in the June quarter as the weaker dollar lifted export prices to an almost six-year high.

Statistics New Zealand says export prices rose 8 percent in the June quarter - their biggest rise since the September 2000 quarter due largely to gains in food and dairy prices.

Export volumes of dairy products went up 21.1 percent and the Dairy Products Index is at its highest, following a record season for dairy production.