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Fonterra raises payout forecast following New Year price spike

New Zealand dairy farmers are set to profit from the January price spike, as Fonterra announces it expects to pay the increased amount of NZ$7.50 per kilogram of milk solids – a 60 cent rise from its previous forecast in December, 2010.

In a statement by Fonterra, this sharp increase, when combined with the 30 cent rise announced last December, means “the forecast Milk Price for 2010/11 is now 90 cent higher than the season’s opening forecast of $6.60 per kgMS and $1.40 ahead of the 2009/10 season’s $6.10 per kgMS”.

This latest increase in the forecast Milk Price reflects the further strengthening of international dairy prices over recent months, according to Fonterra Chairman, Sir Henry van der Heyden.

“This significant Milk Price increase is welcome news indeed for Fonterra farmers,” says Sir Henry, “many of whose farm businesses remain under pressure after several challenging years and a current season marked by some difficult weather conditions. It’s also good news for the New Zealand economy and underlines the importance of dairying to New Zealand’s ongoing prosperity.”

While poor weather had affected dairy farms in many parts of the country, the overall milk production during 2010/11 by Fonterra’s farmer shareholders was expected to be broadly in line with the previous season, according to Sir Henry.

Chief Executive Andrew Ferrier said higher dairy market prices appeared to be driven by a combination of strong demand from China and other Asian markets, and tight international supply due to adverse weather conditions in many parts of the world. “These higher prices have more than offset the negative effects of an appreciating Kiwi dollar against the US dollar.”

 

Image courtesy of https://leestace.wordpress.com/

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