Mid Canterbury farmers relieved at milk price lifts

A Mid Canterbury dairy industry leader says Fonterra’s payout lift is positive news that'll extend well beyond the farm gate.

That’s the view of Federated Farmers Mid Canterbury dairy chairperson Nick Giera after the dairy heavyweight’s 50-cent lift in its 2024/25 forecast farmgate milk price.

The midpoint now sits at $9.00 per kilogram of milk solids, with an anticipated range of $8.25 to $9.75.

The co-op also reported a net profit of $1.1 billion for the financial year ending July 31, which eased back from last year’s record high. But it still allowed it to return a full-year total dividend payout of 55 cents per share, which was 5 cents more than the previous year.

Giera knows it's news that will have positive impacts across the district.

"In terms of the farming sector in Mid Canterbury, it will help all those businesses that rely on dairy farmers’ spending for their own incomes," Giera said.

He also said the announcement brought a sense of relief to farmers, who have been grappling with high input costs.

"The milk price is definitely a positive for farmers' cash flow.

"An increased forecasted milk price, plus a likely reduction in interest rates over time, would help farmers' confidence.

"It will provide some relief for farmers who have higher debt levels."

Giera said he felt Fonterra was "in a good space," having ironed out some operational challenges under the astute leadership of chief executive Miles Hurrell

"They seem to have ironed out some of the operational challenges of the past, and they have a good man at the top."

The cooperative has kept the forecast range wide for the 2024/25 season at $8.25-$9.75 per kilogram of milk solids due to the early stage of the season when uncertainty is greater.

The forecast remains wide to account for the uncertainty of early season profits going into a new period, with the final Farmgate milk price for the 2023/24 season is $7.83 per kilogram of milk solids.

Hinds’ farmer Cole Groves echoed the encouraging sentiments.

"For most of us, cashflow has been pretty tight,’’ he said.

"Income now is just fantastic to get yourself out of overdraft and in a good position.”

Groves said the increase was a welcome surprise, but unexpected, following an increase in August.

"It’s moved early, but most of us are very aware in the past that (Fonterra has) done that and can take it back later in the season if things aren’t going right.”

While it’s great news for Fonterra farms, the money they earn "flows through the community” and benefits everyone, he said.

"This time last year, we were getting paid $5.10 in milk solids.

"And in September to late October we’re getting paid $7.”

Fonterra boss Miles Hurrell said the lift followed recent strengthening in global dairy trade prices and constrained milk supply in key producing regions.

The cooperative’s announced profit of $1.168 billion after tax, which, although down from last year, reflected Fonterra's performance and long-term resilience, Hurrell said.

"We've maintained the positive momentum seen in FY23 and delivered earnings at the top end of our forecast range.’’

FONTERRA’S NUMBERS

For 12 months ending July, compared with a year ago:

• Net profit $1.17b vs $1.6b
• Net profit $1.13b vs $1.58b
• Revenue $23.0b vs $26.1b
• Milk payout (2023/24) $7.83 a kilogram of milk solids vs $8.22 per kgMS
• Forecast payout (2024.25) midpoint $9 per kgMS
• Final dividend 55 cps vs 50 cps

By Claire Inkson and Anisha Satya