Fonterra Cuts 2026/27 Milk Price Forecast to $9.25
Fonterra has reduced its forecast 2026/27 Farmgate Milk Price.
The Morrinsville cooperative, owned by 86 farming families, will pay its suppliers $6.30/kgMS for the 2015-16 season, retaining 11c/kgMS for plant upgrading.
Tatua has a distinguished history of topping the payout stakes.
Fonterra suppliers will get a final payout of $4.30/kgMS, comprising a farmgate milk price of $3.90/kgMS and a dividend of 40c/share.
Suppliers of Westland Milk, Hokitika, New Zealand’s second largest dairy co-op, will get $3.87/kgMS for the last season.
Tatua chairman Steve Allen says the 2015-16 season has been a challenging year, with global milk supply rising in the face of generally lacklustre demand; benchmark milk powder prices declined for most of the year.
He says Tatua achieved a strong result despite the weak market, selling its caseinate, whey protein casenites (WPC) and anhydrous milk fat (AMF) as customer-preferred product all year; and the co-op increased margins on its specialised added value business as a result of the low NZ milk price.
Westland chairman Matt Regan says its payout will be below the breakeven point for most farmers, but the news will not be unexpected.
“We have been predicting for the whole season that 2015-16 would be a tough one for farmers, with our recent cash forecasts in the $3.80-$3.90/kgMS range.
“We did what we could to maintain farmers’ cashflow by starting the season with a higher advance rate of $3.80/kgMS and holding this. This ensured our focus was on cashflow management and delivered as much cash as possible to shareholders.”
Tatua benefited from its hedging policy in the face of a strengthening NZ dollar.
Allen says Tatua’s total revenues for last season reached $281.2 million; gearing ratio (debt divided by debt plus equity) decreased to 35.7% from 36.6% at the end of the previous year.
“The NZ dollar has slowly appreciated through the year and the company’s foreign exchange hedging policies have achieved an overall conversion rate of 0.7135 to the US dollar, a strong performance and in line with Tatua’s benchmark,” says Allen.
Tatua’s farmer shareholders supplied 15.6 million kgMS last season, versus 15.7m kgMS in 2014-15.
“Our supplying shareholders’ milk quality has continued outstanding, with average somatic cell counts remaining at historically low levels and 99.7% of milk collected graded ‘finest’,” says Allen.
