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Fonterra Co-operative Step In Right Direction

5 October 2004
PR 190/04
Step In Right Direction

Dairy farmers are pleased at Fonterra Co-operative Group's higher forecast payout for the current season and rise in its advance rate from next month, said Kevin Wooding, Chairman of Dairy Farmers of New Zealand (DFNZ).

"Any increase in the payout is welcome as it benefits individual farming families, their communities, and the entire New Zealand economy. A bigger payout will also help offset rising on-farm costs, in particular higher rates demands and energy bills," Mr Wooding said.

"More immediately the higher advance will be a help to farmers who have been hit hard by a difficult season due to floods and cold weather in some regions," he said.

His comments follow Fonterra today raising its forecast payout to $4.05 a kilogram of milk solids in the current season, from the previously forecast $3.85. The co-op also raised its advance payout by 10 cents from November.

Mr Wooding was optimistic that Fonterra had headroom to further bump up its forecast payout at its next review in a few months.

"Fonterra is being cautious and obviously doesn't want to raise farmer expectations too high, which is a good thing. However, other forecasters have said Fonterra could be on track to pay out more than $4.40 a kg/ms this season -- an estimate based on current product prices and currency hedging at 60-62 U.S. cents.

"Given that view, dairy farmers will be hoping for plenty more blue sky yet in Fonterra's expected payout. However, dairy farmers should be mindful that the payout is influenced by many factors which can quickly change."

DFNZ is the dairy industry group of Federated Farmers of New Zealand (Inc).


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