December 30, 2008

New Zealand's Fonterra may cut payout to dairy farmers

New Zealand's dairy co-operative, Fonterra, said it may further cut its current fiscal year forecast payout to farmers.

The Auckland-based dairy company said a sharp fall in world commodity prices, worsening global crisis, and fluctuations in the local currency have pressurised its payout forecast for the year ending May 31, 2009.

Fonterra will announce its new payout forecast after its board meeting on January 27.

In November, Fonterra reduced the payout forecast to NZ$6 per kg of milk solids from NZ$6.60, compared with the NZ$7.90 per kg paid to farmers in 2008.

A further reduction in dairy payout will continue to weigh on consumption, which has been hurt by the recession and global credit crisis, according to The Australian.

Fonterra chief executive Andrew Ferrier warned in November that demand was unlikely to recover by mid-2009 as initially expected due to the financial crisis and declining consumer confidence.