News Dairy
Fonterra boosts milk price and continues reduction
New Zealand dairy giant Fonterra increases the expected price for the current season 2024/25 by NZ $0.50 due to rising orders and increasing demand for many dairy raw materials. The demand is coming from Asia, Africa, and also again from China.
CEO Miles Hurrell reports this in an explanation of the price increase. Just over a month and a half ago, Fonterra anticipated a payout price for the current milk production season somewhere between NZ $8.25 and NZ $9.75 per kilogram of milksolids (combined fat and protein). Now, that expected price has been raised to NZ $9.00 to NZ $10.00 per kilogram of milksolids. The mid-price has been increased by $0.50 from NZ $9.00 to NZ $9.50, and the uncertainty margin has been reduced both upwards and downwards.
According to Hurrell, Fonterra also took a good look at the latest GDT auctions when raising the expected price and drew courage from them.
They also take note of reports of a significant decrease in milk production in China. Fonterra does not provide figures, but other sources report a 6% lower milk production in China in the third quarter of this year. Data for the fourth quarter are not yet available. Meanwhile, Chinese purchasing power has decreased. According to Hurrell, demand from other markets in Asia and Africa is also good.
Consumer business up for sale
In addition to a higher milk price, New Zealand farmers can still expect a dividend of 40 to 60 cents per share from Fonterra.
Fonterra also announces that it is now truly putting its consumer business up for sale. This includes well-known brands such as Anchor and Mainland and 17 production locations in Australia, New Zealand, Sri Lanka, and a few other places worldwide. Buyers can contact Fonterra, which has not yet mentioned any names of parties it may be in talks with. The sale is expected to generate between NZ $2.5 billion and NZ $3.5 billion.
The sale proceeds are expected to largely benefit the shareholders, primarily the own farmers.
