Fonterra slashes its milk payout to farmers by 45c a kilo
Fonterra reverses much of last September's rise in the milk payout, cutting it from $4.60 a kilo of milk solids to $4.15.
Hot Topic
Hawke’s Bay
Fonterra has slashed its payout to farmers by 45 cents a kilo of milk solids, citing challenging global economic conditions reducing demand for commodities, including dairy.
The payout will now be $4.15/kgMS, down from $4.60/kgMS previously.
The dairy cooperative has left its forecast dividend at between 45-55c per share.
The latest cut to the payout reversers much of last September’s increase when Fonterra raised the payout from $3.85/kgMS.
“Key factors driving dairy demand are declining international oil prices which have weakened the spending power of countries reliant on oil revenues, economic uncertainty in developing economies and a slow recovery of dairy imports into China,” Fonterra chairman John Wilson says.
“In addition, the Russian ban on European Union dairy imports continues to push more product onto the world market,” he says.
Since September, prices in Fonterra’s Global Dairy Trade auctions for its key whole milk powder product have fallen 12%.
Fonterra chief executive Theo Spierings says although global demand remains sluggish, the dairy giant still supports the general view that dairy prices will improve later in the calendar year.
“However, the time frame for supply and demand rebalancing has moved further out and largely depends on a downward correction in EU supply in response to the lower global prices,” Mr Spierings says.
“These prices are clearly unsustainably low for farmers globally and cannot continue in the longer term.”
Jenny Ruth
Thu, 28 Jan 2016
Thu, 28 Jan 2016
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Fonterra slashes its milk payout to farmers by 45c a kilo
55025