Fonterra lauds New Zealand milk price in new financial figures

Australian farmers say record-high Kiwi farmgate prices highlight how processors here can improve. Here’s why.

Australian farmers say record prices paid to their New Zealand counterparts show Fonterra has the capacity to raise its farmgate offerings on this side of the Tasman.

Fonterra chief executive Miles Hurrell confirmed this 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 percent.

Northern Victoria farmer Bridget Goulding said Australian farmers deserved a price that reflected the buoyant domestic and international conditions.

“The current prices aren’t giving farmers the confidence they need to plan for the future of their businesses,” she said. “Fonterra and the other processors need to do better. There’s plenty of room for price improvement.

“We all remember the 2016 clawback by Fonterra and Murray Goulburn. The relationship between farmers and many processors has never fully recovered.”

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.