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Agriculture: Welcome Lift For Dairy Incomes

December 13th, 2012

Fonterra’s decision to lift its 2012-13 payout forecast by 25c from $5.25kg of milksolids to $5.50 could pump an additional $400m into the dairy sector. It follows a 17.7% lift in average dairy commodity prices since August 1 and Fonterra CEO Theo Spierings says the co-op’s forecasting anticipates global dairy prices are likely to move higher in the first half of 2013.

The Fonterra board also announced a forecast net profit after tax range of 40-50c a share, and a 40% increase in advance rate payments to farmers. The advance rate increase will provide welcome relief to farmers who have been operating with very tight cash flows.

Originally the next advance on the payout would not have been paid until next May, but it will now be delivered to farmers next month.

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