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Federated Farmers dairy section chair Richard McIntyre says the extra money will be welcomed by farmers.
An $800 million tax-free capital return announced by Fonterra will be "very welcomed" by farmers, says Federated Farmers dairy section chair Richard McIntyre.
He says the capital return, planned for October, will help farm budgets under pressure from a drop in the forecast milk price and rising input costs.
"We started the year with a forecast price of $9.50/kgMS and it has dropped to $8.50," McIntyre told Dairy News.
"This left a bit of a hole in the budget. For many farmers this season will be break even.
"Therefore, this extra money will be very welcome"
Fonterra had previously indicated an intension to return $1 billion to shareholders and unit holders.
However, this was linked to the sale of its Chilean Soprole business and a review of its Australian business.
In November last year, Fonterra announced that it had sold its Soprole business for $1.005 billion.
However, the co-op also decided to retain its Australian assets.
Fonterra chief executive Miles Hurrell says following completion of the sale of Soprole, it intends to reduce debt and return around 50 cents per share and unit.
"We are aiming for a record date for the proposed tax free capital return in late September 2023, with cash to be received by our farmer owners and unit holders the following month.
"Implementation of the capital return will require a Scheme of Arrangement to be voted on by shareholders, and approval by the High Court, which is a common process for this type of transaction.
"More information on this process will be provided to our farmer owners and unit holders in due course."
Fonterra remains committed to a strong balance sheet as well as an "A" band credit rating, he adds.
He also noted that the sale of Soprole remains subject to satisfaction of condition previously announced, including commencement of an irrevocable public tender offer process in Chile for the outstanding shares in Soprole not already owned by Fonterra.
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