Fonterra’s record milk payment

Fonterra has lifted its milk payment to farmers for this season to the highest level since the co-operative was founded 20 years ago – and it expects the payout will contribute more than $13.2 billion to the economy.

The co-operative yesterday lifted and narrowed its forecast for the 2021/22 season a second time, and it is now expecting to pay its farmer suppliers between $8.40 and $9 per kilogram of milk solids (kgMS). That is up from its forecast in late October of between $7.90 and $8.90 per kgMS.

The midpoint of the range, which farmers are paid off, increased to $8.70 per kgMS from $8.40 per kgMS, and would be the highest level since Fonterra was formed in 2001. The cooperative paid farmers $7.54 per kgMS last season, and its previous record was $8.40 per kgMS in the 2013/14 season.

Global dairy prices have been supported this season by weaker milk production due to poor weather and higher feed costs.

Fonterra’s New Zealand milk supply is down about 3 per cent on the same time last season, but improving weather conditions means the co-operative has retained its expectation for milk collections to end the season down just 0.9 per cent at 1525 million kgMS.

The milk payment would be an important boost to communities, said Fonterra chief executive Miles Hurrell. ‘‘It’s the result of consistent, strong demand for dairy at a time of constrained global supply,’’ he said.