Saturday, March 30, 2024

Fonterra offers fixed milk price

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Fonterra farmers will again be able to fix part of the milk supply at a set price.
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And, the co-operative has announced an incentive scheme will be introduced to reward farmers for welfare, milk quality and environmental performance.

The new Fixed Milk Price tool, will help farmers with budgeting, planning, and managing on-farm profitability, Fonterra said.

Farm Source and global operations chief operating officer Robert Spurway said “as a co-operative owned by 10,000 farming families, we are committed to making a difference for Fonterra farmers and providing flexible options will help them share up, invest on farm, and manage financial exposure.

“This season reminds us of the volatility in the global marketplace and the impact it can have on the milk price. While the Co-op manages this volatility as best it can when selling our products, we recognise that it’s farmers who feel the brunt of it.

“In addition to providing farmers with the opportunity to get more price certainty, the Fixed Milk Price will also provide the Co-operative with certainty on the margins it can achieve on a portion of milk supplied. It’s a win-win,” Spurway said.

How it will work:

-All Fonterra farmers will have the opportunity to participate on a monthly basis (excluding January and February).

-The Fixed Milk Price will be referenced to the NZX Milk Futures Market, minus a service fee of no more than 10c/kgMS initially.

-Over the course of a season, farmers will be able to fix up to 50% of their estimated milk production per farm.

-Fonterra will make at least 1 million kgMS available at every event and up to a total of 5% of New Zealand milk supply available in a given season.

Fonterra has also updated shareholders on its plan to provide them with more meaningful recognition and rewards for producing high quality, safe, sustainable dairy.

“Fonterra farmers have long led the way when it comes to milk quality, animal welfare and environmental best practice, and should be recognised for the difference they are making as a co-op,” Spurway said. 

“We will better recognise the many Fonterra farmers who go above and beyond to produce world class dairy, care for their animals and protect the environment for generations to come. At the same time, we’ll target support to those farmers who want to make improvements.”

Fonterra plans towill bring together existing milk quality, animal welfare and environmental activities into a single, simpler framework, giving them greater clarity about what they need to do to supply Fonterra today and in the future.

The co-op is consulting with farmers through a series of workshops held across the country. 

To date, farmers have been supportive of the concept, providing a range of views and robust feedback. 

Once all input is received, the new approach will be finalised for introduction in June 2019.

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