Fonterra's Advance Rate changes to improve cashflow for famers

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Fonterra will bring forward payments for its milk supply from June as part of a wider plan to improve cashflow for its farmer shareholders.

"In line with our strategy we signalled that we're going to look at improvements to our Advance Rate and just how we can get more money to our farmers earlier in the season, whilst still of course maintaining a strong financial position for the co-op" said Chief Financial Officer at Fonterra Marc Rivers.

"We're just really aware of the importance of cash flow on-farm" Rivers told The Country Early Edition's Rowena Duncum.

Listen below:

With that in mind, Fonterra was implementing three improvements to the Advance Rate from June 1 this year, said Rivers.

1. Bringing forward the monthly payment date from the 20th of each month to the 15th.
2. Bringing forward the final settlement payment, so the October retro-payment will now be paid in full, no later than five working days after the Annual Results come out in September. (This is in addition to the usual September retro-payment which is paid on the 15th).
3. Moving to a single guideline for the Advance Rate. This meant the Advance Rate would start in July at 65 per cent of the mid-range of the forecast Farmgate Milk Price range.

Also in today's interview: Rivers explained what these changes will mean financially for Fonterra farmers.