Wednesday, 12 November 2014 11:18

Payout is priority

Written by Sudesh Kissun

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Theo Spierings addresses the AGM.

FONTERRA IS assuring farmers that the milk payout will remain its main priority.

Speaking at the co-op's annual meeting in Palmerston North this morning, Fonterra chairman John Wilson said the co-op is always striving to improve total payout to farmers.

"Our payout strategy will never change," he says.

Wilson acknowledged that on-farm cash flow is tight given the sharp drop in payout compared to last year.

Fonterra is forecasting $5.30/kgMS this season. Last season farmers received $8.50/kgMS - comprising a milk price of $8.40 and 10/share dividend.

Wilson says tight cash flow will force farmers to reduce feed and supplements in summer; more cows are also expected to be culled.

This will impact milk production for this season and next season. Fonterra's milk supply this season is up 3% compared to last season.

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