Listen: Fonterra releases financial tool to help its farmers

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Fonterra's Chief Operating Officer for Global Operations Robert Spurway spoke to The Country Early Edition's Rowena Duncum about a new financial tool the co-op has released to help its farmers.

"We know that GDT results bounce around and that shows just how volatile the global milk market can be, and on-farm costs can't be changed easily," says Spurway.

"So we think this is an opportunity for farmers to manage better, fix up to 50 per cent of the milk they produce in terms of price, and that will give them more certainty."

Listen below:

Spurway explains that 10 times a year, farmers will be able to lock up to 50 per cent of their milk production at a fixed price over the season.

Duncum asks why Fonterra is providing this tool rather than leaving it to others, such as the NZX.

"Ultimately, as a cooperative we're owned by 10,000 farmers and it's our purpose to maximise the wealth of our shareholders," says Spurway who explains the tool will also benefit customers as well as farmers.

"Whilst it's a relatively small amount of our total milk, we'll know what margins we can make on the sale of that milk and that improves planning with customers."

Also in today's interview: Robert Spurway talks about how Fonterra is going to recognise its farmers better for the top-notch milk they produce.