Fonterra ups milk payments

That includes an additional payment of 40c kg/MS. The company has said it would also reimburse the interest charge of 0.85 of a cent, on the Fonterra Australia Support Loans package. 

Fonterra Australia managing director René Dedoncker said the company’s business was in a stronger position, which underpinned a competitive forecast full year range.

“Providing Fonterra’s forecast full year price range now is aimed at giving our farmers guidance so that they can plan for next season with confidence,” Mr Dedoncker said.

Fonterra came to the decision, after consulting with several board members of its supplier body, the Bonlac Supply Company (BSC). Fonterra has a legal obligation, under the Bonlac supply agency agreement, to match or make higher payments than Murray Goulburn (MG).

MG moved the average milk price it paid suppliers up to $5.53 a kilogram milk solids (kg/MS), as it also scrapped the milk supply support payment. Mr Dedoncker said Fonterra had considered the decision.

“The additional payment of 40c kg/MS will be available to all current, retired and recommencing suppliers.”

Crossley supplier Karinjeet Singh-Mahil said Fonterra has been left a potential bill of $62 million for its 1400 Australian dairy farmers.

 BSC chair Tony Marwood said the decision showed that Fonterra was listening to farmers, and was committed to rebuilding confidence in Australian dairy.

“As farmers we need timely and clear price information so that we can plan ahead. Fonterra is first to provide a closing forecast price range for next season.

“This goes a long way for farmers in helping us budget with certainty,” Mr Marwood said.

“The BSC has been very mindful that we had to be fair and equitable for all our farmers, understanding that many farmers made different decisions at the end of last season to suit their businesses.”  Mr Marwood said the payment was designed to fulfil the benchmark milk price agreement for the 2015/16 season.