12.30pm
Fonterra Co-operative Group today announced a 15c increase to $3.95/kg of milksolids in its forecast payout for the current season.
Fonterra announced in July its 12,600 farmers would get a payout of $3.63/kg for the 2002-2003 season, and that the current season's payout was likely to be $3.80/kg.
The $3.63 payout last
season represented a $4.1 billion payment to Fonterra's, but the previous year Fonterra paid $5.33/kg -- a total of $5.8 billion.
Fonterra chairman Henry van der Heyden told shareholders at the co-operative's annual meeting today that the company's board based the forecast decision on revised forecasts.
The management team had a "very real determination to achieve this higher payout", he said.
"I am sure the increase will be welcomed by farmers, as will the real commitment of the management team."
The meeting, broadcast from Hawera to six other meeting places for shareholders, was the first chance for Fonterra's shareholders to meet the new chief executive Andrew Ferrier, who took up his position on September 1.
Mr Ferrier told the meeting he felt there were four basic rules that had to be followed to generate shareholder wealth. "First, recognise our people are our greatest asset. Second practise operational excellence in everything you do. Third move up the value chain wherever possible. Fourth, be totally customer focused. I see nothing in those rules that does not apply to Fonterra." Mr Ferrier commented that while he was new to dairy, he was not new to understanding what shareholders deemed as success.
"It comes down to two words, higher payout. My job is to set the performance goals I want to see achieved in this business and to support the management team as they get on with the job of delivering on these goals. "The team is focused on maximising efficiencies, maximising revenues and value added earnings and minimising our costs."
But Mr van der Heyden also warned farmers that though the company's new foreign exchange policy meant that it had "hedged" its foreign currency transactions for 15 months ahead, that could only reduce the volatility of effects on payout.
"It cannot mitigate currency impacts," he said. Farmers needed to approach next season's payouts with caution. "A 6c gain in the New Zealand dollar would cost you 50c/kg milksolids," he said.
"At this point, no one can make any accurate predictions about where the New Zealand dollar will be against the US dollar."
- NZPA
