Fonterra Cooperative Group, the world’s biggest dairy exporter, expects to pay $1.20 more to farmers per kilogram of milk solids for the 2014 season as a result of strong international prices for dairy products.
The farmer-owned cooperative will pay $7 per kgMS next season, up from $5.80 in the current season, it said in a statement today. Auckland-based Fonterra held its forecast price and dividend of 32 cents per share for the current season and said it will announce its forecast dividend for the 2014 season in July after completing its budget.
“The general consensus is that dairy commodity prices have peaked but will continue at or near current levels until the fourth quarter of 2013,” chairman John Wilson said. “Most external forecasts point to prices remaining relatively strong through 2014.”
Fonterra is owned by about 10,500 farmers and controls about one-third of the world’s dairy exports, generating more than 7 percent of New Zealand’s gross domestic product.
Global milk production growth is slowing as a result of unfavourable weather conditions in many key milk producing regions, chief executive Theo Spierings said.
The strong uplift in international diary powder prices will likely create a more challenging environment for Fonterra’s earnings in the first of its 2014 financial year, Spierings said.