Fonterra reveals opening farmgate milk price for 2021-22 season

Fonterra is ahead of the processor pack, releasing its opening farmgate milk price. Last year the big three released their new-season rates on the June 1 deadline.

Fonterra Australia managing director Rene Dedoncker. Picture: Adam Taylor

Fonterra has become the first of Australia’s big three processors to declare its opening price — three weeks out from the June 1 deadline.

The Auckland-based processor today declared a weighted average farmgate milk price for the upcoming season of $6.55 per kilogram of milk solids, with an estimated closing price range of $6.55 to $6.95 per kilo milk solids.

Fonterra Australia managing director René Dedoncker said that good market conditions and a strong and well-performing business had led to an early opening price.

“Coming out with a price early provides our farmers with a clear line of sight to help them make better decisions and plan for the year ahead,” he said.

“Some of our domestic and export contracts are due to be settled later this month, so we will review this price when these are finalised and to ensure we remain competitive, as we will in line with market and business performance throughout the season.’’

Fonterra’s chief rivals — Bega and Saputo — are yet to reveal their 2021-22 opening prices although smaller player Bulla was first out of the gates more than a fortnight ago with its farmgate figures.

Mr Dedoncker said external economic factors were improving, such as Australia and New Zealand’s handling of the coronavirus pandemic.

“On the market, we’ve seen recent strength in commodity prices as global supply chain challenges begin to moderate,’’ he said.

“The Australian dollar has traded between 76–78 US cents, but risk remains given the strength of the economy.

“With the easing of COVID-19 restrictions, we are also seeing a robust recovery of the out of home business with more people returning to restaurants and cafés.”

Mr Dedoncker said that Fonterra has also been working with its farmer representative body — the Fonterra Australia Suppliers’ Council— on a new pricing structure for the new season which is all about choice for farmers.

“Our new pricing allows farmers to farm the way that suits their needs with a choice of base rates to suit their milk curve, and also gets cash on farm as early as possible with changes to our incentive structure,” he said.

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