OPINION: Your old mate reckons Fonterra and its dairy farmer shareholders may well be all cock-a-hoop about the prospects of a near $8 payout this year and one north of $8 next year.
The co-op is introducing a new tool called Fixed Milk Price. It joins a set of seven of Fonterra’s financial tools and aims to assist farmers with budgeting, planning, and managing on-farm profitability.
Farm Source and global operations chief operating officer Robert Spurway says the co-op is committed to making a difference for Fonterra farmers and providing flexible options to help them share up, invest on farm, and manage financial exposure.
“This season reminds us of the volatility in the global marketplace and the impact it can have on the milk price. While the co-op manages this volatility as best it can when selling our products, we recognise that it’s farmers who feel the brunt of it.
“In addition to providing farmers with the opportunity to get more price certainty, the Fixed Milk Price will also provide the co-operative with certainty on the margins it can achieve on a portion of milk supplied. It’s a win-win,” says Spurway.
How it will work
- All Fonterra farmers will have the opportunity to participate on a monthly basis (excluding January and February)
- The Fixed Milk Price will be referenced to the NZX Milk Futures Market, minus a service fee of no more than 10c/kgMS initially
- Over the course of a season, farmers will be able to fix up to 50% of their estimated milk production per farm
- Fonterra will make at least 1 million kgMS available at every event and up to a total of 5% of New Zealand milk supply available in a given season