By PHILIPPA STEVENSON
A combination of higher milk production and higher marketing returns have boosted dairy industry earnings by $500 million on last season.
The Dairy Board will pay farmers $3.35 a kilogram of milksolids, which is 10c cents higher than they received last year.
Dairy companies increase the payment to farmers from
their own earnings, and the big two, New Zealand Dairy Group and Kiwi Dairies, have already indicated the final payout to their suppliers will be around $3.70 a kilogram.
The board said its result was achieved despite lower average international commodity prices.
Chairman Graham Fraser said the excellent outcome was the result of favourable currency movements and strong profit performances from both the board's strategic business units.
Mr Fraser said it was forecast that the ingredient business, NZMP, would achieve a profit of $320 million.
This was up $80 million on the previous year.
"NZMP's sales revenue will be a record $4.8 billion, which was up $200 million on the previous year's figure and particularly significant given the overall lower commodity prices prevailing during the year."
New Zealand Milk, the consumer goods business, would record a profit of $250 million, up $74 million.
This would be 45 per cent ahead of the 1998-99 result.
"Contributing to this strong performance were a recovery in demand in Asian markets and a very encouraging 15 per cent lift in returns by New Zealand Milk Foodservice," said Mr Fraser.
Continued strong business performance together with favourable market and exchange rate projections justified the board's cautious optimism on the outlook for the 2000-01 season, he said.
The board has indicated a $3.65 to $3.75 a kilogram payout range for the new season and this week Dairy Group told supplier meetings it expected the final payout next year to be around $4 a kilogram.
