Fonterra lauds New Zealand milk price in new financial figures

The next big step-up in Australian dairy is likely to take place next month. Here’s why.

Fonterra suppliers will know next month whether or not an autumn step up is heading their way after Auckland management posted bumper profits.

Fonterra chief executive Miles Hurrell confirmed last week that NZ suppliers were on track to receive between $NZ9.70 ($A8.86) and $NZ10.30 ($A9.40) per kilogram milk solids.

The Auckland-based chief also reaffirmed a midpoint price at $NZ10 ($9.13) per kilogram milk solids — a record for New Zealand farmers.

The Kiwi pricing guidance formed part of Fonterra’s interim earnings report, which confirmed its first half net profit was up 8 per cent to $NZ729 million ($A665 million), with revenue growth of 14 per cent.

Fonterra Oceania farm source and sustainability director Matt Watt said the processor was aware that “milk price remains top-of-mind for farmers.”

“We are working to secure pricing for our back-half milk supply, with global dairy values higher than 12 months ago and it’s been pleasing to see continued improvement,” he said.

“Global demand is showing signs of improvement and supply remains tight, although domestic demand remains subdued.

“Our next bi-monthly milk price review is April when we will have a better view of our full year business performance, and we will keep our farmers updated on the outcome.”

Australian Dairy Farmers president Ben Bennett said the New Zealand prices highlighted how Fonterra and other Australian processors had the capacity to pay farmers more for their milk but chose to keep prices low to boost profits.

“Farmers were told by the processors 10 months ago that prices needed to reflect international market conditions. So what has changed?” he said.

“Good for New Zealand farmers — no-one begrudges them getting a fair price for their milk. “But Australian dairy farmers are right to ask why they aren’t getting the same deal.

“They’ve talked about a different pricing structure and every other excuse but it doesn’t stack up and they know it.”

In December, Fonterra became the first Australian processor to offer a step-up for the 2024-25 season after months of criticism from farm lobby leaders over what they considered a low-ball opening offering.

The pre-Christmas step up took Fonterra’s weighted average milk price in Australia to $8.15 per kilo milk solids, with Bega and Saputo following suit within days while smaller processors either waited until the new year to step up or are still sticking with their June 2024 offering.