By IRENE CHAPPLE
Waikato sharemilker Roy Johnson is well pleased.
The Otorohanga man milks 1000 cows to support a young family and, at 2pm yesterday, his wife rang to with the good news: Fonterra had increased its milksolids forecast payout.
Johnson produces 280,000kg of milksolids a season and he's looking at a $11,000
income top-up - his share of an extra 8c on Fonterra's forecast for 2003/2004, which brings the payout to $4.23/kg.
The 2004/2005 forecast was also increased, by a solid 35c to $3.85 per kg of milksolids.
The final payout for 2003/2004 will be announced next month and, if the forecast is realised, will add $95 million to the total payout for Fonterra's 12,600 farmers.
The 2004/2005 forecast will add $420 million to the total payout.
Said Johnson: "That [increase] is really discretionary spending, which farmers will spend in their local towns."
But Johnson's not about to splurge. He is a young farmer and is determined to reduce debt.
"My plan is purely overdraft focused," he said.
"We've got a great business and any bonuses are used for us to pay off debt. That's my personal situation."
But the news "is really good. We want to see Fonterra perform."
The increase - which was expected - comes on the back of high commodity prices and an easing exchange rate.
Farmers have been enjoying a golden run on international commodity markets for beef, lamb and milk powder.
Fonterra chairman said Henry van der Heyden said the 2004/2005 forecast of $3.85 was based on expectations that demand would stay strong and the exchange rate would stay roughly where it was.
He said prices were historically high and that was likely to dampen demand "to an extent which is not in our shareholders' best interests".
But the increase today, said van der Heyden: "Will put a smile on farmers' faces."
The Dairy Farmers Association o welcomed the forecast increase, but said the forecast increase for the 2004/2005 year was from a "very low" $3.50.
Both Fonterra and the Dairy Farmers Association said they were disappointed at last month's long-range forecasts by the Ministry of Agriculture and Forestry.
Analysts had warned that payouts might drop to $3.11 in the 2005/2006 year, but van der Heyden said that it was still too early to make such forecasts.
