Inside Milk
Fonterra expects less milk due to drought
Fonterra is revising its forecast for milk collections for the 2020 season, in light of ongoing dry weather conditions in key dairy farming regions in different parts of New Zealand.
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Fonterra CEO Miles Hurrel explains: “We are seeing milk collections decline as member dairy farmers in the North Island face continued dry weather.” In some parts of the island no rain has fallen since November. The expected milk supply for the current season ending in June has therefore been reduced from 1.530 million to 1.515 million kilos of milk solids (approximately 11,5 liters of milk).
Impact coronavirus
Like many other dairy companies, Fonterra is also affected by the outbreaks of the coronavirus. "The current situation is very uncertain. However, we have secured a large part of our milk production through sales contracts and that helps us to manage the impact," says Hurrel. That is why Fonterra dares to keep the profit forecast the same.
Despite the uncertainty surrounding corona, Fonterra has left the milk price forecast at $7 and $7,60 per kilo of milk solids. The expected milk price is the highest since 2013 and also the fourth highest ever. The expected dividend remains between 15 dollar cents and 25 dollar cents per share. When Fonterra announces its interim result on March 18, a further update on the impact of the virus can be provided, Hurrel said.