Adelaide's independent news


Fonterra warns big drop in milk payout


The world’s biggest dairy exporter Fonterra has announced a big drop in its forecast farmgate milk price payout, blaming global economic conditions.

Comments Print article

Fonterra, which has an office based in Adelaide and sources primary produce in South Australia, Victoria, New South Wales and Tasmania, announced the price for the 2015/16 season was now being put at $NZ4.15 per kilogram of milk solids from $NZ4.60/kgMS, it said on Thursday.

When combined with the earnings per share and retentions this would equate to a forecast cash payout of $NZ4.50-$NZ4.55/kgMS, well below the $NZ5 mark which is considered the break-even point for farmers.

The cut was expected and Westland Milk Products also cut its forecast payout this week.

Fonterra chairman John Wilson says there is less global demand for commodities, including dairy.

Low oil prices meant oil producers had less spending power and China’s recovery of dairy imports was slow.

“In addition, the Russian ban on European Union dairy imports continues to push more product on to the world market.”

New Zealand dairy farmers had reduced production, but other countries, including in Europe, production was increasing, Wilson said.

Since last September, prices at the GlobalDairyTrade auction for whole milk powder have fallen 12 per cent, and skim milk powder prices are down 8 per cent.

Wilson said the reduction would be very tough on our farmers but Fonterra would look at the best way to help its farmers’ cash flows.

Chief executive Theo Spierings says Fonterra supports the general view that dairy prices will improve later this calendar year.


We value local independent journalism. We hope you do too.

InDaily provides valuable, local independent journalism in South Australia. As a news organisation it offers an alternative to The Advertiser, a different voice and a closer look at what is happening in our city and state for free. Any contribution to help fund our work is appreciated. Please click below to become an InDaily supporter.

Powered by PressPatron


Show comments Hide comments
Will my comment be published? Read the guidelines.

More Business stories

Loading next article

Subscribe to InDaily – it’s free!

South Australia’s locally owned, independent source of digital news.

Subscribe now and go in the monthly draw* for your chance to WIN a $100 Foodland voucher!

Subscribe free here

*Terms and conditions apply

Welcome back!

Did you know it’s FREE to subscribe?

Subscribe now and go in the monthly draw* for your chance to WIN a $100 voucher!


*Terms and conditions apply