Listen: Fonterra's Fixed Milk Price will give farmers 'income clarity'

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Fonterra has introduced a new financial tool that will give its farmers peace of mind in a "volatile world" says Judith Swales.

This is the first time farmers have been offered The Fixed Milk Price, Fonterra's Chief Operating Officer for Global Consumer and Foodservice's told The Country Early Edition's Rowena Duncum.

"We all know we're living in an increasingly volatile world, and global milk price is increasingly volatile. The Fixed Milk Price ... basically enables our farmers to gain greater income clarity and certainty."

So how does it work?

"The Fixed Milk Price will be determined based on the average of the daily settlement price of the three days following Wednesday's GDT event" said Swales.

Farmers will receive an email on the Saturday following the GDT, with the Fixed Milk Price, and the volumes that are available.

Then farmers can apply between 7am on Monday and 7pm on Tuesday the next week.

It may sound "a bit complicated" at this point, but Swales said farmers will have the opportunity to "check out if it works for them".

"They should also probably talk to their farm accountant or their rural professional about whether Fixed Milk Price is right for their farm" said Swales, who pointed out that only farm owners can apply.

Also in today's interview: Swales talks about Fonterra's Best Site Cup awards and looks forward to Fieldays.