Fonterra's decision to bring dividend payments to shareholders forward should ease some of the pressures on dairy farmers, says Steve Bailey Bay of Plenty Federated Farmers dairy spokesman.

'This should help farmers with planning for next season and help them to pay contractors.”

Fonterra Co-operative Group Limited Chairman John Wilson says the forecast total dividend for the current financial year is 40 cents per share.

'The board today declared a 20 cent interim dividend which will be paid in April. We intend declaring the remaining 20 cents per share in two dividends of 10 cents in May and 10 cents in August.

'The timing of these payments will help farmers' cash flows at the time of the season that they need it most and is a specific response to the very challenging financial conditions our farmers are facing.”

The decisions has also been welcomed by Fonterra Shareholders' Council Chairman, Duncan Coull, who says today's interim results announcement is in line with forecasts, and the expectations of the council.

Fonterra paying out an interim dividend of 20 cents per share, and accelerating the final dividend payments, will be very well-received by farmer shareholders and go some way to alleviating immediate on-farm cash-flow pressures.

'With the forecast Milk Price remaining at $3.90 per kg/MS, Farmer Shareholders' expectations are that the value-add side of their business will provide them the much talked about counter-cyclical benefits.”

Steve says Fonterra's decision demonstrates its commitment to farmers.

'We are all in this together and this decision will make it a little bit better. We each now have to put ourselves in the boots of others we work with, including contractors, and look at the situation from another perspective, be up front in any negotiation we have with each other and make sure everyone gets paid.”

Receiving the dividend payout earlier will help farmers plan for the future, making decision about how many cows they want to milk and how they will farm them.

'We will come through this. We have to farm ourselves into a situation where our debt to income ratio is more manageable.”

Duncan says results from Fonterra's added value business are encouraging as, on the back of weaker global demand, it has moved volume into higher value which has contributed to the lift in interim profit.

'A clear focus on driving cash into the business is also evident in terms of free cash flow and a reduction in gearing ratio.

'It is important that the Board continues to drive the business forward as the performance of some business units, such as Australia, Venezuela and China Farms are having a negative effect on the business.

'However, the council looks forward to the current positive momentum continuing and translating into more cash for our Farmers.”

The two dividends in May and August are subject to the Fonterra board's approval at the time and Fonterra's financial performance continuing to support its forecast earnings per share of not less than the current 45 to 55 cents forecast range per share.

The payments do not signal any intention to move away from Fonterra's normal practice of twice-yearly dividends paid in April and October. They are also consistent with Fonterra's dividend policy.

'We are firmly on track to achieve our forecast earnings of 45-55 cents per share, ahead of the 40-50 cents per share we indicated at the beginning of the season. 'We are backing ourselves to support our farmers and confirmation of the first payment will be made in May,” says John.

The Board had considered an extension to the support loan provided early in the season which will total $383 million by April 2016, but based on the solid performance of the co-operative in the first half it felt paying the final dividend earlier was the better option.

'This approach is directly related to the solid performance being achieved by the business.”

Fonterra would also continue to support farmers with on-farm costs through competitive pricing through its Farm Source stores and through discounts secured on necessities such as fuel and power.

Bay of Plenty Federated Farmers is holding a dairy section meeting open to all farmers called 'We are in this together” on Thursday, March 31, from 10.30am to 12.45pm at the Awakeri Events Centre, State Highway 30, Awakeri.

Steve urges all farmers to attend. 'This is a great opportunity for you and your workers to have a day off the farm to listen to guest speakers covering a wide range of topics.”

There will be speakers from industry bodies, Federated Farmers, Rabobank and the Rural Support Trust.

RSVP for catering purposes to:

Kim – Tauranga office

Bay of Plenty Federated Farmers

Phone (07)578-5039

Email: bayofplenty@fedfarm.org.nz