Listen: Why Fonterra dropped its milk price forecast

Photo / Mark Mitchell

It was a big day for Fonterra yesterday with the announcement of its results for the first quarter of the financial year.

The dairy co-op cut its farmgate milk price forecast for 2018/19 to $6.00 to 6.30 kg of milk solids from a previous range of $6.25 to $6.50/kg.

Fonterra Head of Farm Source for Bay of Plenty, Lisa Payne told The Country Early Edition's Rowena Duncum why the co-op cut its milk price.

"Whilst this is disappointing to have to do this, the reason behind it is really just due to global milk supply remaining stronger, relative to the demand."

Listen below:

Another big announcement for Fonterra is that it is selling its only ice cream business Tip Top.

Payne says this is because Tip Top has "reached its maturity as an investment from the co-op's perspective."

"To take it to the next phase it would require a load more investment beyond what we're willing to make."

"We've committed to reduced debts levels by $800 million by the end of the financial year [and] we need to make sure we improve that performance and unfortunately that may mean divestment of some of our assets."

Also in today's interview: Lisa Payne discusses why Fonterra has decided to buy Beingmate out of Darnum and how farmer consultations about DIRA are going.