Fonterra lifts payout as dairy market recovers

Posted by Daniel Palmer on 23rd September 2009

Fonterra this week announced an increase in their payout to farmers of 55 cents to $5.10 per kg of milksolids as dairy markets begin to show signs of life after a horrendous year.

It was only around a year ago that dairy prices were at their peak after a sustained rise, but the global financial crisis led to a significant crash as demand fell.

Fonterra CEO, Andrew Ferrier, said the strong increases in prices for whole milk powder (WMP) at the globalDairyTrade events in the past two months echo a broad strengthening of demand and robust recovery in international dairy prices.”What we’re seeing in the international market is the firming of a trend, with a more positive sentiment and stronger demand, producing better pricing across the board. Whole milk powder prices have been leading the way, with the prices for other dairy commodities now all moving in the right direction,” he explained. “While this is good news for our farmers in New Zealand, we remain in a period of extreme price volatility, which makes forecasting challenging, to say the least.”

Mr Ferrier added that the earnings and outlook for Fonterra’s international businesses and joint ventures, including its Australia-New Zealand consumer business, remain unchanged from the July forecast.