Fonterra payout forecast for dairy farmers unchanged, despite volatile global markets

Posted by AFN Staff Writers on 2nd September 2011

The largest processor of milk in the world, Fonterra, today confirmed there was no change to its opening season forecast payout for 2011/12 of A$7.15 – $7.25 before retentions.

The New Zealand-based dairy co-operative forecasts a milk price of A$6.75 per kilogram of milk solids and a distributable profit of 40 to 50 cents per share.

Fonterra Australia-New Zealand, a subsidiary of Fonterra, owns well-known consumer dairy brands Bonlac Foods Ltd, Brownes, Bonland Dairies and Murrumbidgee Dairy Products.

Fonterra’s Chairman Sir Henry van der Heyden said the Board had reconfirmed the forecast against a background of “significant volatility in global markets and foreign exchange rates”.

Sir Henry said, “In volatile economic and market conditions, we could face a range of factors that may affect the season’s milk price. But at this very early stage of the season we see no reason to alter the forecast.

“We will continue to monitor possible slowing global economic growth that might translate into weaker dairy demand.”

Fonterra’s Chief Executive Andrew Ferrier said Fonterra had finalised its budget for the 2012 financial year. The forecast distributable profit range remains at A$570-$720 million.

For the previous 2010/11 season and financial year ended on 31 July 2011, Fonterra will announce its final milk price and distributable profit when it publishes its annual financial results in late September. The current 2010/11 payout forecast is A$8.00-$8.10 per kilogram before retentions (which equates a milk price of A$7.50 per kilogram of milk solids and a distributable profit of 50-60 cents per share).