What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
However, farmers who already have an interest-free loan from the co-op should not expect much.
Fonterra chairman John Wilson says at its half-year result announcement the co-op will say how it will assist farmers in "a small way".
Last week, the co-op dropped its forecast milk payout for the season by 25c, from $4.15/kgMS to $3.90/kgMS. Combined with the forecast earnings per share range of 45-55 cents, this means a total forecast available for payout of $4.35-$4.45/kgMS. This equates to a forecast cash payout of $4.25-$4.30/kgMS for a fully shared-up farmer after retentions.
Wilson says the drop in payout is the last thing farmers want to hear in this challenging season.
"At times like this the business needs to do everything it can to drive every last cent back to farmers.
"Management is focused on reducing cost and generating cash right across the business. The continuing lift in financial performance and our balance sheet strength will provide opportunities to support our farmers' cashflows. We will provide an update on this with our interim results on March 23," says Wilson.
Fonterra farmers are also putting the co-op on notice.
Shareholders Council chairman Duncan Coull says farmers now need
