Fonterra Lifts Farmgate Milk Price
Good news for Fonterra farmers. The co-op has raised this season’s farmgate milk price mid-point by 25c to $9.75/kgMS.
While it is encouraging to see the improvement in Fonterra's performance in the second half of the season, farmers will be disappointed with the 25 cent dividend which was at the lower end of their expectations," says Fonterra Shareholders Council chairman, Duncan Coull.
The cooperative today announced it will pay a final cash payout of $4.65 for the 2015 season for a 100% share-backed farmer, comprising a farmgate milk price of $4.40/kgMS and a dividend of 25 cents per share.
Coull says farmers had an expectation the business would have been able to take greater advantage of the low milk price environment. A lower milk price means higher returns for Fonterra value added business where raw milk is treated as an ingredient.
Coull was encouraged by the co-op's improved second-half performance which saw many parts of the business operate at a high level.
"This $506 million profit has been driven by solid returns from the ingredients and the consumer and food service businesses.
"However, the international farming business suffered from the effects of lower global milk prices and we remain concerned with the performance of the Australian business.
"The board and management have given us an undertaking that they have a strategy in place to address this and the expectation from council is that its implementation will give effect to the turnaround required.
"It's also important to note that this has been somewhat of a transition year with regard to our Co-op's most recent capital investments and as such these have yet to provide any significant returns."
Coull says farmers will be buoyed by today's forecast payout announcement for the 2015/-6 season of $5.00-$5.10 (total available for payout), which included a 75 cent increase in the farmgate Milk Price to $4.60 kg/MS and earnings per share of 40-50 cents.
"The increase in the milk price is yet another illustration of the volatility in the global market place and Farmers will move forward with cautious optimism.
"It is encouraging to see that the strategy is forecast to deliver returns which more accurately reflect farmers significant investment in the co-op."
Coull says the council is currently reviewing the co-op's 2014/15 annual results figures as part of its monitoring role and will provide detailed analysis and commentary in its annual report to Farmers which will be available in early November.
