Fonterra is offering its farmers further support in the shape of an interest-free loan to help them deal with the current challenging conditions.

Chairman John Wilson says Fonterra is well placed to help its farmers because of the co-operative's underlying strength.

Photo: File.

'Being able to help our farmers is all about standing together as a co-operative and using our collective strength to get through these tough time,” explains John.

'We have had a lot of interest from farmers who appreciate what the co-operative is trying to do for them to assist them with their farming businesses in a tough financial climate, and we are anticipating a large number of applications.”

Farmer shareholders can apply for the interest-free loan of 50 cents for every kilogram of share-backed milk solids produced from June 1 to December 31, 2015.

The loan will be interest-free until May 31, 2017, after which Fonterra may charge interest.

Farmers can repay all or part of the loan at any time and no security is required over their shares or any other assets.

The loan will be repayable directly from milk payments, and automatic repayments will occur when total advance rate payments exceed $6.

Applications open today and close at 5pm on September 25, 2015. Farmers can apply online (the preferred option) via: www.nzfarmsource.co.nz, by email, fax or post.

For the first half of the season (June to December), the loan, known as Fonterra Co-operative Support, will be funded by one-off savings generated by changes the business is making, such as improving working capital.

Last month Fonterra said forecast total payout available to farmers in the 2015/16 season will be $4.25-$4.35 – well down on the $8.40 farmers received two seasons ago.