By PHILIPPA STEVENSON agriculture editor
Fonterra shareholders are braced for another drop in forecast payout today when the mega dairy co-op reports its six-month result.
Any move by the company which generates 20 per cent of New Zealand's exports and 7 per cent of gross domestic product will hit economy-wide.
The predicted income
for the year to May for the company's 13,000 farmers has tumbled three times in the past year to $3.70 a kilogram of milksolids, cutting farmers' earnings by a third, or $1.7 billion, compared to last year's $5.30 payout.
Fonterra Shareholders Council chairman Tony O'Boyle said conjecture about the payout was "all over the place".
"Some retail banks have been talking prices that have never been put out there. Everyone's been plucking numbers."
Fonterra had given farmers conflicting messages, ranging from $3.70 was "a stretch" to it was "in the bag", O'Boyle said.
Commodity export prices were at historical lows for the first part of the season starting in June, but milk-powder prices have risen by as much as 60 per cent in recent months.
However, the company said the price hikes had been more than offset by the rising New Zealand dollar, though it did not expect an immediate impact.
In late January chief executive Craig Norgate said Fonterra's foreign exchange cover shielded it from the worst impact of the currency movement and the effects would be felt next season.
Some industry observers doubt Fonterra's forex cover could have totally protected it against the extent of the dollar's rise, but Federated Farmers' Dairy Farmers NZ chairman Kevin Wooding was not one.
The company was well covered and a "firesale" of product stocks carried over from the previous season was more likely to be behind any payout fall.
"They traded last year's product out at ridiculously low prices. They've taken a bath on that, or we have. I understand we should be getting something like $4.20 now."
His organisation proposed to investigate where the money had gone, Wooding said. Farmers would be gutted by the unexpected cut in earnings, he said.
