Listen: 'Pretty strong start' to Fonterra's financial year

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Fonterra's Q1 business update shows the co-operative's new strategy in action says Mike Cronin.

It was the first time business performance had been updated since the release of the co-op's new strategy's "triple bottom line" - healthy people, healthy environment and healthy business - Fonterra's Managing Director for Co-operative Affairs told The Country Early Edition's Rowena Duncum.

"We're making really good progress across all three areas".

The results also showed the financial year had "got off to a pretty strong start" for Fonterra said Cronin.

"The underlying performance of the business is going well and we're still focusing on making sure we've still got a good financial discipline".

Probably the biggest highlight for farmers and the rural community was increase in the co-op's milk price said Cronin.

Fonterra had lifted its farmgate milk price to $7.30 a kg, which would be the fourth-highest price in its history.

The forecast range has shifted up to $7.00 to $7.60 per kg, up from a previous forecast range of $6.55 to $7.55 per kg, and lifting the mid-point by 25c to $7.30/kg.

Although the milk price increase was good news, it also created a challenge for the rest of the year said Cronin.

"Of course as the milk price increases, it does put a bit of pressure on our gross margins and therefore our earnings, so we have to keep an eye on that".

Also in today's interview: Cronin explained how a good forecast Farmgate Milk Price would benefit Fonterra farmers and talked about successful initiatives the co-op was involved with.