Tuesday, 22 August 2023 09:55

Advance rate

Written by  Sudesh Kissun
Another lift in the advance rate would be risky as Fonterra could end up overpaying farmer suppliers and be forced to claw back money. Another lift in the advance rate would be risky as Fonterra could end up overpaying farmer suppliers and be forced to claw back money.

Fonterra may need to provide additional support to cash-strapped farmers if the forecast milk price continues to fall.

However, another lift in the advance rate would be risky as Fonterra could end up overpaying farmer suppliers and be forced to claw back money.

Fonterra Co-operative Council has previously pushed hard for more cash to be returned to farmers quicker.

Council chair John Stevenson says, as a result, Fonterra changed its advance rate guidelines to pay farmers a higher percentage of the forecast milk price earlier.

But he adds that further increases to the advance rate would come with an increased risk of Fonterra over-paying if there are further declines in milk price.

This month, Fonterra shareholders received $6/kgMS as advance rate for milk supplied in July.

However, for the rest of the year, farmers can expect $5.25/kgMS in advance rate from Fonterra.

"There is a long way to go in the season yet," Stevenson told Dairy News.

"If we continue to see challenges aroun milk price then there will likely be increased calls for Fonterra to use the strength of its balance sheet to support its owners."

More like this

Fonterra trims board size

Fonterra’s board has been reduced to nine - comprising six farmer-elected and three appointed directors.

Returns 'not good enough'

Fonterra leaders are making their case for offloading the co-operative's $3 billion consumer business, noting that its return on capital has been nowhere near respectable.

Record milk price!

A record farmgate milk price for Fonterra shareholders is all but confirmed for this season.

Chinese strategy

OPINION: Fonterra may have sold its dairy farms in China but the appetite for collaboration with the country remains strong.

Featured

Massey Research Field Day attracts huge interest

More than 200 people turned out on Thursday, November 21 to see what progress has been made on one of NZ's biggest and most comprehensive agriculture research programmes on regenerative agriculture.

Expo set to wow again

Stellar speakers, top-notch trade sites, innovation, technology and connections are all on offer at the 2025 East Coast Farming Expo being once again hosted in Wairoa in February.

A year of global challenges

As a guest of the Italian Trade Association, Rural News Group Machinery Editor Mark Daniel took the opportunity to make an early November dash to Bologna to the 46th EIMA exhibition.

National

OSPRI's costly software upgrade

Animal disease management agency OSPRI has announced sweeping governance changes as it seeks to recover from the expensive failure of…

Machinery & Products

BA Pumps expand

Cambridge based BA Pumps & Sprayers, specialists in New Zealand-made spraying equipment, has acquired Tokoroa Engineering’s product range, including the…

Entries open for innovation award

Fieldays and its renowned Innovation Awards are celebrating their 57th year, marking a longstanding tradition in the agricultural calendar, with…

» Latest Print Issues Online

Milking It

Chinese strategy

OPINION: Fonterra may have sold its dairy farms in China but the appetite for collaboration with the country remains strong.

Not fair

OPINION: The Listener's latest piece on winter grazing among Southland dairy farmers leaves much to be desired.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter