$13.5m lift in milk payout forecast for Northland dairy farmers

Northland dairy farmers will hope the present forecast milk price of $6.55 per kgMS remains or lifts further. PHOTO/JOHN STONE

Northland dairy farmers are poised to earn $589.5 million if the latest milk price forecast is maintained until the final payout.

Despite posting a net loss of $348 million, dairy giant Fonterra yesterday announced a lift in the forecast milk price of $6.55 per kg of milk solids for 2017/18 season, up from the $6.40 forecast in December.

A payout of $6.55/kgMS will earn Northland dairy farmers $589.5m based on 90 million kg of milk solids they supply to Fonterra each year - $13.5 million more than the December forecast.

Fonterra recorded an after-tax loss of $348 million in the first half to January 31 this year, partly because of $183m it paid to French food giant Danone for losses from the botulism scare.

However, high dairy prices globally especially for whole milk power have allowed Fonterra to increase the forecast payout.

Northland dairy farm consultant Tafi Manjala said $6.55 was a good payout but farmers should exercise caution between now until the end of the year when the final milk price would be finalised.

If it stayed at $6.55, he said farmers should be able to spend their earnings on things such as farm infrastructure towards the end of the year.

The recent rain, he said, has given farmers about 20 per cent more silage for winter than in past years.

Northland Chamber of Commerce chief executive Tony Collins said the uplift in forecast milk payment would enable farmers to invest in machinery and equipment— something they have not been able to do in the past three years because of low payouts.

"Dairy farming, together with tourism, are crucial drivers of Northland's economy and when these sectors do well, businesses that sell to them do well," he said.

Fonterra typically announces the final milk payout in September.

Last year's final payout price was $6.52 per kgMS which raked in $586.8m for Northland dairy farmers.