Fonterra Lifts Farmgate Milk Price
Good news for Fonterra farmers. The co-op has raised this season’s farmgate milk price mid-point by 25c to $9.75/kgMS.
The co-operative released its 2020-21 annual results this month, reporting record earnings and a final payout of $9.25/kgMS for its farmer shareholders.
Tatua chief executive Brendhan Greaney says Waikato was in and out of Covid Level 2 restrictions on three occasions during the financial year.
"Fortunately, we weren't required to move into lockdown as we did the previous year, which meant our operations were less impacted including being able to stay on track with some important capital projects," he told Rural News.
However, as a business reliant on export, shipping disruption remained on ongoing challenge.
"The way our international trade and supply chain teams worked together and with the wider business to keep our products moving has been one of our highlights," he says.
Tatua makes specialised bulk dairy ingredients for export and is also a key supplier of specialised nutritional ingredients to global health and nutritional companies.
Greaney says bulk ingredient demand and prices are favourable and the company is well contracted into 2022.
The outlook is also positive around its more specialised businesses.
However, at the same time it remains conscious that with Covid things can change quite quickly especially as they relate to the evolving situation. "Customers in most of the countries we supply have been living with the delta variant for some time," he says.
"We are expecting shipping to remain one of continuing challenges for the year ahead as the situation doesn't look to be improving - we will have to pick our way through as we have been."
Tatua announced a record payout of $10.43/kgMS before retentions for the 2020-21 season. The co-op retains $1.18/kgMS for reinvestment, paying farmers a cash payout of $9.25/kgMS. Fonterra last month announced a final payout of $7.74; milk price of $7.50 and 20c dividend. Synlait announced an average payout of $7.82/kgMS for last season - made up of a base milk price of $7.55 and incentive payment of 27c.
Tatua's 106 shareholder-owned farms had their second highest milk production season on record, supplying 15.65 million kgMS, 3.3% ahead of the previous year.
Greaney says the payout has been well received by farmer shareholders.
"We've had some very positive feedback - including broad support for retaining some earnings for reinvestment and maintaining a strong balance sheet."
The co-op has retained $18m for reinvestment to improve production capability and sustainability-related projects.
"We do have a reasonably weighty capital program planned for the year, including projects with a sustainability focus, as well as others to increase our capacity and capability in the manufacture of our more specialist or value-add products,":says Greaney.
In deciding the final payout, Greaney says Tatua sought to balance the needs of shareholder's farming businesses with the requirement for continued investment in the business to support longer-term sustainability, and "a sensible level" of debt.
The co-op's gearing (debt divided by debt plus equity) averaged 20.5% last year, which was lower than the previous year average.
"We have deliberately reduced our debt levels over the last few years to be in apposition that we now think is about right for the environment we are in," adds Greaney.
He paid tribute to the co-op's workforce, both here and overseas.
"Our people have once again shown real dedication and commitment toward the business through another challenging year. Our financial performance and everything that has been achieved is the reflection of the collaboration and collective efforts of everyone."
