increase font size
Fonterra farmers will get an extra 20c/kgMS for milk supplied to the co-op this season.
Fonterra farmers will get an extra 20c/kgMS for milk supplied to the co-op this season.
The co-op today increased the 2017-18 forecast farmgate milk price by 20 cents to $6.75/kgMS.
However, the co-op is revising its forecast normalised earnings per share guidance range down to 25-30c/share; the forecast dividend range for the full year is down to 15-20c/share.
Fonterra chairman John Wilson says the higher milk price is good news for farmers who are still recovering after the two years of lower milk prices in 2015 and 2016.
However, the higher milk price puts pressure on Fonterra’s earnings in a year which is already proving challenging due to the payment to Danone and the impairment of the Co-operative’s Beingmate investment.
“The business’ revised earnings forecast is disappointing for our shareholders and unitholders. However, the total forecast cash payout for farmers increases to $6.90-$6.95 per kgMS which is the third highest payout this decade.”
Chief Executive Theo Spierings says the earnings challenge that comes with the higher milk price is compounded by the timing and significance of this particular increase.
“There is always a natural lag in being able to pass through an increase in our input costs. But this increase has been both rapid and late in the year, making it difficult for these higher costs to flow through into our sales for this financial year.
“Against this backdrop, we can see our sales margins are not where they need to be at this point in the year to achieve our original earnings forecast”.
Wilson says the 20c lift in farmgate milk price reflects a global supply and demand picture that continues to be positive for farmers.
“Global dairy prices have risen since the start of the season. The price of Whole Milk Powder is particularly strong due to continued growth in demand from China and across Asia,” says Wilson.
“Our cooperative’s forecast milk collections here in New Zealand have increased to 1,500 million kgMS, up from the 1,480 million kgMS we reported at half year, thanks to improved farming conditions in March and April after a challenging spring and summer.
Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.
OPINION: Farmer shareholders of two of New Zealand's largest co-operatives have an important decision to make this month and what they decide could change the landscape of the dairy and meat sectors in New Zealand.
OPINION: As CEO of the Dairy Board in the 1980s I was fortunate to work with a team of experienced and capable executives who made most of the brand investments that created the international consumer business Fonterra inherited. Soprole in Chile was the largest, but there were more than 20 countries where consumer marketing companies were established and Anchor and other brands were successfully launched.
Fonterra has delivered a fifth straight year of record organic milk price for farmer suppliers.
Fonterra says favourable weather conditions supporting pasture growth is boosting milk production.
Farmers are welcoming the Government’s revised science-based biogenic methane targets for 2050.
Like many manufacturers around the world, European agricultural machinery and tractor manufacturers are currently operating in a difficult market environment. But they are heading to the world’s largest agricultural machinery event in Hanover next month with a degree of cautious optimism.
Established in 2021, the John Deere Technician of the Year Awards champion the important contribution parts and service technicians make to the Australian and New Zealand agriculture, construction and forestry industries.
Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.
The ACT Party says media reports that global dairy giant Nestle has withdrawn from the Dairy Methane Action Alliance shows why New Zealand needs to rethink its approach to climate.
Spinach is NZ's favourite leafy green, according to the Department of Statistics.
