News

Fonterra cuts farm milk price

New Zealand’s dairy giant, Fonterra has lowered its forecast farmgate milk price for 2014-15 to $5.30 per kilogram of milk solids ($4.28 US).  That is down 70 cents from the previous forecast.  The co-op paid $8.40 per kgms last year ($6.78 US).

Fonterra Chairman John Wilson says the lower price reflects continued volatility in the Global Dairy Trade Index.  That Index has fallen 44 percent since February in reaction to strong global milk production, China’s reduced purchases and Russia’s ban on dairy product imports from a number of countries.

For the Fiscal Year ending July 31^st: Fonterra reports earnings of $503 million (NZ) down 50 percent from the previous year while net income fell 76 percent to $179 million.  Chief Executive Officer Theo Springs says the higher cost of goods sold, higher interest rates and constrained margins in foodservice and consumer businesses all contributed to the lower income.

Fonterra buys milk from 10,500 farmers in New Zealand and is the largest dairy products exporter in the world.