Northland dairy farmers happy with final milk price

Final payout price is good but Fonterra needs to improve its finances going forward, says Northland dairy farmers. Photo/Michael Cunningham

Dairy farmers in Northland are content with the final payout of $6.69 per kg of milk solid but warn Fonterra to improve its finances if decent payouts are to continue.

The dairy giant yesterday announced a final payout of $6.69 per kg/MS for last season plus a dividend of 10 cents per share despite making a net loss after tax of $196m.

Part of the loss was as a result of a $232 million payment to Danone relating to arbitration, and $439m write down on Fonterra's Beingmate investment over whey protein recall.

A payout of $6.60 per kg/MS will yield $602m for Northland dairy farmers. In May, the forecast price was set at $6.75 per kg/MS that would have raked in $607.5m. Northland's 1030 dairy farms supply about 90 million kg/MS each year .

Titoki dairy farmer and former Fonterra board member Richard Booth said farmers should be able to make a bit of money from last year's milk sales that would be spent on loan repayment and general farm work.

"The payout should have been 5 cents higher had Fonterra not deducted that amount from a previous forecast to shore up its balance sheet. The company should stick to producing and marketing locally-produced milk instead of focusing on the investment side of the business.

"Building farms in China has no bearing on the milk payout in New Zealand and farmers have been very concerned about the direction Fonterra has been taking in the last five to eight years."

Okaihau dairy farmer Terence Brocx said Fonterra was delivering well with a healthy payout considering the hundreds of millions the Co-Op lost overseas.

"Farmers should never lose sight of that. The strong payout will help pay off debt and recover from low payouts from previous seasons," he said.

The consumer side of the Fonterra business, he said, was performing poorly perhaps because the likes of Tip Top and Anchor were paying more for milk.

"Overall, the final payout is not the top end but farmers would be very pleased with it. It's at a level where New Zealand remains competitive with other milk producing countries.

"If the milk payout hits $7 or more, then countries like US and Ireland will produce more and export to our markets. That will result in an oversupply of milk and a reduction in price," Brocx said.

The forecast farmgate milk price for this year is $6.75 per kgMS.