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Fonterra reduce 2008/2009 payout forcast (ouch!)

September 24, 2008
Reduced dairy payout

Update: 10% payout drop announced

Fonterra Cooperative had a media release today where they announced the value of the final payout for milksolids in the 2007/2008 season and a revised payout forcast for the 2008/2009 season.

The 2007/2008 season has a retained a final payout of $7.90 per kilogram of milksolids (being $7.59 plus a value-added return of 31 cents) - this is the highest payout on record and one of the reasons why we chose this year to give farming a go.

More relevant for us though is the payout forcast for the 2008/2009 season since that is the season we are working in. Unfortunately Fonterra announced a revised payout forecast which is lower than their opening forecast made in May.

The "current" season's forecast has been lowered from $7.00 per kgMS to $6.60 per kgMS (being $6.25 plus value-add of 35 cents).

That's not good news for us but at least the reduction is only about 6%. World milk-based commodity prices have reduced much more than that over the last few months but they have been partially offset by a weaker New Zealand dollar (i.e. better exchange rates for exporters).

We're only four months into our year on the farm so for now nothing much changes with this announcement from Fonterra except that we have to work harder to increase our production levels.

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