Fonterra Achieves Record Milk Payout, Farmers Face Grocery Strain

Fonterra has announced a record farmgate milk payout of $10.16 per kilo of milk solids for the past season, marking a significant achievement for dairy farmers in New Zealand. This result comes alongside the co-operative’s full-year net profit of just over $1 billion, a slight decrease from the previous year, but still indicative of strong performance in the dairy sector.

According to Wayne Langford, the national president of Federated Farmers, this payout may indicate a new standard for farmers. Langford expressed optimism about future farmgate returns, suggesting that while the $10 mark may not be the baseline, lower figures around $7.50 to $8 could represent the minimum, with potential peaks reaching $11 to $12. He emphasized that achieving these targets will require significant effort.

Positive Impact on Rural Communities

Langford described Fonterra’s results as excellent news for both rural communities and the broader economy. He praised the co-operative for its substantial improvements over the past four to five years, highlighting the hard work and dedication that led to this outcome. As a farmer-owned entity, Fonterra’s profits are expected to benefit the rural community significantly.

“The strong payout last year enabled many farmers to repay debts and overdrafts,” Langford noted. “With these returns, there will be more spending power in our communities. Now is the time for those associated with farming—like builders and contractors—to capitalize on this positive momentum.”

Concerns Over Grocery Prices

While the record payout is a cause for celebration, Langford acknowledged that many New Zealanders are experiencing the pinch at the supermarket due to high dairy prices. He pointed out that farmers share in this struggle when purchasing groceries. Although rising production costs contribute to elevated prices, he urged supermarkets to examine their profit margins, particularly concerning butter prices.

“As a farmer and a father of three boys, I am acutely aware of the cost of butter and other essentials,” Langford commented. He noted a recent global decline in butter prices of around 15 percent over the past two dairy trading sessions and suggested there could be a future easing of these prices.

Langford also proposed that increased competition among supermarkets could lead to lower prices for consumers, benefiting both farmers and the public.

The recent results from Fonterra signal a promising outlook for the dairy industry, yet they also serve as a reminder of the complexities within the food supply chain that affect both producers and consumers alike.