Fonterra payout up 10 cents on

Tuesday 28th April 2009

Fonterra Cooperative Group, the world’s biggest exporter of dairy products, is raising its payout to farmers amid "some encouraging signs of more stability" in global dairy prices.

The increase will deliver cooperative member farmers $5.20 per kilogram of milksolids, still well down on the $6 per kg payout predicted last November and last season's record $7.90 payout.

The 10 cents increase is worth approximately $120 million to the rural economy, based on the 1,192 million kilograms of milksolids collected in the previous season.

However, any further room for upward movement will be balanced against retaining cash for balance sheet strength, chairman Henry van der Heyden said.

Fonterra does not normally announce payout changes unless they are more than 30 cents per kg, but "the board wanted to share the news … with farmers as soon as possible".

"Although international dairy markets remain uncertain and volatile, some encouraging signs of more stability have been emerging in recent months," van der Heyden said. "We now have the cautious optimism necessary to signal a modest but welcome increase in payout.

"Fonterra management is working hard to increase the payout further, but farmers should expect some level of retentions if the amount available for payout exceeds $5.20." The $5.20 payout comprises an increased Milk Price of $4.75 per kg of milk solids, and an unchanged 45 cents per Kg Value Return forecast.

Businesswire.co.nz

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