Fonterra Cuts 2026/27 Milk Price Forecast to $9.25
Fonterra has reduced its forecast 2026/27 Farmgate Milk Price.
The 2016-17 payout, for season ending May 31, includes a milk price of $6.12/kgMS and a dividend of 40 cents per share.
The co-op announced the final payout as part of its 2017 annual results.
Revenue increased by 12% to $19.2 billion, with rising prices offsetting a 3% decline in volumes at 22.9 billion liquid milk equivalent (LME). Normalised EBIT of $1.2 billion was down 15% as a result of reduced margins across the business which also influenced net profit after tax, down 11% at $745 million.
Fonterra chairman John Wilson said the cooperative’s ability to maintain its forecast dividend despite the milk price increasing by 57% over the year and the impact of negative stream returns was an excellent result.
“We will always need to manage variability across our cooperative – both in global markets and in our local farming conditions. We’ve demonstrated our ability to deal with those conditions and deliver on our strategy again this year,” says Wilson.
“Over recent seasons, our farmers have made significant personal sacrifices to reduce costs through a sustained low milk price period.
“As part of our continued business transformation, the cooperative has also made a fundamental shift in the way it operates, continuing the strong focus on increased efficiency and developing new revenue streams.
“Despite lower milk volumes due to poor weather in parts of the season, the business delivered a good result by prioritising higher value Advanced Ingredients and growing our sales of these in-demand and specialised products by 473 million LME this year.”
Fonterra’s consumer and foodservice business continues its strong performance. This year it sold more than 5.5 billion LMEs, an additional 576 million LME on last year. This volume growth across these two portfolios has delivered normalised EBIT of $614 million, an increase of 6% on last year.
“Today’s announcement will be welcome news for our farmers, who remain focused on carrying their on-farm efficiencies through to the new season to make the most of improved prices,” says Wilson.
