Fonterra's milk collection down 0.5 percent with one month of season to run

Wednesday 8th May 2013

The impact of drought in February, March and April on dairy farms was greater than Fonterra Cooperative Group anticipated, with milk collection down 0.5 percent in the first 11 months of the season.

The Auckland-based company collected 1.414 million kilograms of milk solids in the latest 11 months, from 1.421 million kgMS in the same period a year earlier, it said in its Global Dairy Update. In the North Island, where drought was declared in most regions, collection fell 5.2 percent, while in the South Island it rose 8.2 percent.

"Consistent rainfall across the country in April has helped to improve on-farm conditions, but this has been too late to stop milk production falling below last season's record levels as many suppliers have already stopped producing for the season," the company said.

Milk collection in April tumbled 34 percent compared to the same month of 2012 and prices of dairy products reached a record on the GlobalDairyTrade platform last month. They edged off their highs in the first sale in May.

In March, Fonterra was predicting production would about match the previous season, having previously forecast an increase.

The company lifted its forecast payment to farmers by 30 cents per kilogram of milk solids and expects to pay an annual dividend of 32 cents per share, meaning a fully-shared up farmer will get a cash payout of $6.12 this season, down from $6.40 last year.

Units in the Fonterra Shareholders Fund fell 0.6 percent to $7.85, having gained 13 percent this year.

BusinessDesk.co.nz

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