Fonterra steps up farmgate figure for New Zealand suppliers

New Zealand suppliers of Fonterra have received some welcome news from the Auckland-based processor — but it’s still the farmgate status quo for Australian farmers.

New Zealand dairy farmers have received news of a farmgate price step-up from Auckland-based Fonterra.

FONTERRA has lifted its 2020-21 forecast farmgate range to NZ$6.90-$7.50 kg/milk solids (A$6.52-$7.09) for its New Zealand suppliers.

The Auckland-based processor has the midpoint of the range set at NZ$7.20 kg/milk solids (A$6.81) — now roughly 40 cents higher than the average paid to Australian suppliers.

Fonterra chief executive Miles Hurrell said this week’s decision to lift the NZ farmgate figure result of strong demand for dairy — demonstrated by the continued increase in Global Dairy Trade prices since the co-op last revised its milk price at the beginning of December.

“In particular, we’ve seen strong demand from China and South East Asia for whole milk powder and skim milk powder, which are key drivers of the milk price,” Mr Hurrell said.

“This lift in our forecast farmgate milk price is good news for New Zealand farmers.

“It would see the co-op contribute almost $11 billion to the New Zealand economy through milk price payments this year, which helps support the wellbeing of rural communities.”

Fonterra Australia management has been contacted by The Weekly Times to explain what the NZ decision will mean for its suppliers on the other side of the Tasman.

In a statement, Mr Hurrell said it was the view of Fonterra management that the season was “firming up” with the impact of global market volatility subsiding.

“However, we are continuing to keep a close eye on a number of factors,” he said.

“These include New Zealand weather conditions, expected challenges from further waves of COVID-19 and increasing milk production in the Northern Hemisphere.”

Australia’s big three processors have stuck to opening prices around the $6.40/kg milk solids mark since mandated by government to outline farmgate figures seven months ago.

Fonterra was forced to lift its average opening price in June — from $6.06/kg milk solids to $6.40/kg milk solids within 48 hours of its initial figure being reported following a backlash from suppliers at the time.

Saputo offered $6.40/kg milk solids at the June 1 deadline while Bega split its opening figure geographically — $6.40 for southern Victoria and $6.55 for northern Victoria.

Last week, United Dairyfarmers of Victoria president Paul Mumford demanded dairy’s big players — Fonterra, Saputo and Bega — increase their respective farmgate figures.

“My message to the big processors is simple: Time to cough up, fellas,” Mr Mumford said.

“We were provided with opening prices on June 1 as part of the mandatory dairy code of conduct, for the July 1 start of the season. So their price assessment of the industry is now at least six months to seven months out of date.”

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