Fonterra sets new export record

Fonterra chief executive Andrew Ferrier at the Ports of Auckland. Photo / Supplied

Fonterra says it has set a new export record, sending 2.1 million tonnes of product to international markets for the first time in its nine-year history.

Fonterra chief executive Andrew Ferrier said consistent demand across the year, particularly from markets in Asia, helped the world's biggest dairy exporter to cross the two million tonne milestone and end the financial year with tight inventories.

The export tonnages were 60,000 tonnes higher than in 2008/09 and were a factor in New Zealand's six month run of consecutive trade surpluses.

Milkpowder, butter and cheese all ranked among the leading exports which saw the June trade surplus hit $276 million and the year-to-June surplus reach $639 million.

"The global recovery has been led by Asia, with demand from China particularly good," said Ferrier. "Every tonne that's left New Zealand has helped turn the tide with the balance of payment deficit.

"It's a good feeling to be helping hold the worst of the global recession's impacts on New Zealand's economy at bay, one container at a time," Ferrier said in a statement.

The record represents 140,000 TEU (20-foot-equivalent containers) shipped from New Zealand ports from August 2009 to July 2010.

On average, Fonterra shipped 380 containers a day, with highs of 500 between the peak export months of November and April. Based on Kiwirail's average train length, that was equivalent to seven trains a day moving Fonterra products to the ports.

"Dairying provides around a quarter of New Zealand's exports and as economies like China and other parts of Asia move to higher living standards, the outlook remains very positive," said Ferrier.

"While we continue to see price volatility, dairy remains the standout performer, not only in primary sector exports, but also in overall exports and our consistent performance is not only good for farmers but for the economy as a whole."

Fonterra directors last week held their forecast payout for the current season at $6.90-7.10/kg - the figure set in May - despite concerns over continuing volatility in international dairy commodity prices and the exchange rates for the New Zealand dollar.

Westpac chief economist Brendan O'Donovan has predicted that this season's milk production could rise by as much as 8 per cent to 10 per cent due to a La Nina weather cycle favourable to dairy farming in many regions.

The final payout will be announced in September next year, but directors last week reviewed their forecast after four months of price falls in Fonterra's milkpowder auctions online.

A payout of $6.90-$7.10 - comprising a $6.60/kg milk payment and an after-tax distributable profit of 30c-50c a share - would mean a gross income for average Fonterra farmer of about $852,000.

Ferrier said last week that if commodity pricing and foreign exchange rates remained at current levels for the rest of the season, then the 2010-2011 payout would be marginally lower than the current forecast, but directors were seeing signs of potential strengthening of international prices further into the season.

- NZPA