Tik Tok
OPINION: While Tik Tok may be in the bad books of western Governments over security fears, the social media app is proving a boon for some Kiwi companies who are using it to market their products in Asia.
The co-op is paying out 81% of its $6/kgMS forecast milk price for 2016-17 season, or about $4.85/kgMS, as an advance rate to farmers to ease cashflow issues on farm.
Wilson says a strong balance sheet is allowing the co-op to pay a higher advance rate.
The 2016-17 season ends May 31; Fonterra will announce its forecast payout for next season in early May.
Wilson says farmers will continue to receive a higher advance rate through the winter months.
“We have brought forward what we would normally pay to assist our farmers with their cashflow because clearly our balance sheet is strong,” he says.
“We normally always have a lot of deferred to pay July, August and September; the way we have shaped it will allow those normal, strong payments through winter.”
“The last two winters have been tough on farms but cashflows will be stronger this winter and spring.”
Wilson says the low payouts over the past two seasons also affected local contractors and suppliers but things have started to ease for everyone with the higher advance rates.
He says the half-year results announced by Fonterra last week were outstanding, and the strength across the co-op, from employees to farmers, was special.
“We have put more milk volume into high value products and have seen our farmers doing remarkable effort in adapting their businesses to the tough environment.
“For us, to see the strength improving across the co-op – whether it’s us or our farmers – is critical…. But of course there’s some distance to travel yet because farmers endured two low payouts and that takes a bit to bounce back from.”
Fonterra’s board confirmed the forecast payout of $6/kgMS and a target full year dividend of 40 cents/share.
Wilson says the forecast continues to reflect global dairy markets’ steady demand and relatively stable prices. “World dairy prices have continued to show signs of volatility, but we believe the fundamentals are sound and expect pricing over the balance of the season to remain stable.”
But he urged farmers to budget cautiously.
“The fundamentals of dairy are strong but there will be ongoing volatility in our global markets.
“Our strategy to grow volume and value will continue to underpin our performance in the second half of the financial year,” Wilson says.
