Inside Milk
Fonterra is recovering and expects excellent milk prices
Although Fonterra has performed poorly in recent years, the milk price is not being skimped on. The New Zealand dairy cooperative has raised its forecast again and predicts the highest milk price in years.
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Fonterra expects a milk price of between $7 and $7,60 per kilo of milk solids (approximately 11,5 liters of milk) for the current season, which started in June and ends in May. This is an increase of 25 dollar cents compared to the forecast in October. The expected milk price is the highest since 2013 and also the fourth highest ever.
Dividend again
The expected dividend is set between 15 dollar cents and 25 dollar cents per share. This is a boost for member dairy farmers, because last year, for the first time in history, no dividend was paid out due to poor results. The final milk price will not be announced until September next year. A lot can still happen until then, but expectations are positive.
In a statement, Fonterra said this increase is due to rising dairy prices on the global market, citing the Global Dairy Trade, which has risen significantly. Whole milk powder in particular weighs heavily at Fonterra, as New Zealand is the largest exporter in the world. This ranking has risen to the highest level since 2017.
Strategy is catching on
In the past 2 years, Fonterra has performed well miserable and heavy losses were suffered. To turn the tide, the dairy cooperative launched a new strategy this autumn. Miles Hurrel, the dairy company's CEO, is positive about the progress being made. Without mentioning financial details, he says the dairy processor has had a good first quarter of the 2019/2020 financial year.