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Fonterra Sets Records To Boost Farmer Payout

Fonterra Ingredients Sets New Records To Boost Farmer Payout

Record year-end milk flows, sales volumes and revenue figures helped Fonterra reward farmers with an eight cent lift in payout for the season just ended.

The Co-operative exceeded a number of previous best performances during April and May which helped lift last week's forecast payout from $4.15 kg/ms to $4.23 kg/ms for the 2003/04 season.

Chief Operating Officer Jay Waldvogel says following a record spring peak volume of more than 70 million litres a day, good autumn grass growth resulted in Fonterra suppliers producing a record 877 million litres of milk for April, easily beating the previous April milk flow record of 825 million litres.

"Good planning meant we quickly turned that increased volume into sales. The end result is that record milk was turned into record sales. Thanks to an outstanding effort by our supply chain and sales network we were able to really capitalise on strong global demand and the high commodity prices to boost farmers' incomes as the season drew to a close."

Fonterra Ingredients achieved a number of other records for May. "We packed a record amount of product into containers and shipped record tonnages from New Zealand," says Mr Waldvogel. .

Fonterra Ingredients generated global sales of more than 250,000 metric tonnes (MT) of product in May, a record for a single month. This earned NZ$1 billion in revenue, the first time Fonterra Ingredients has reached this New Zealand dollar figure in one month.

Mr Waldvogel says enough dairy ingredients were sold from New Zealand in May to fill 12,300 shipping containers which, laid end-to-end, would stretch for 80km, the equivalent of providing a glass of milk for every man, woman and child in the world.

Mr Waldvogel says the record effort underscored the Co-operative's ability to effectively manage its product inventories.

"We made a decision well over a year ago to drive down and tightly manage our inventories. We ended the 2003/04 season with lower inventories than last season and significantly lower than the year before, so we are not carrying over significant amounts of product into the new season.

"This means that during the winter season when milk supplies are low we manage our inventories to ensure supply to contracted customers. Also Fonterra Ingredients continues to work with third party suppliers to meet customer demand over this period."

Mr Waldvogel said the new season's production will become available in September following the higher milk flows heading into spring.

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