Dairy farmers will be better off next year after Fonterra announced an increase of 30 cents in its forecast milk price for the 2010/11 season.

Fonterra chairman Sir Henry van der Heyden says the board's decision to raise the forecast milk price from $6.60 to $6.90 per kilogram of milk solids reflects the continuation of high international dairy prices further into next season.
However, Fonterra is reviewing the potential impact of recent dry conditions around New Zealand on anticipated production levels.
'It is still early in the season, and some falls of rain could help a lot, but milk production in the North Island is declining and we know farmers in some regions are struggling.”
The forecast distributable profit range for the 2011 financial year is unchanged at 40-50 cents per share, as is the target dividend range of 25-35 cents per share.
Fonterra now forecasts that a 100 per cent share backed farmer will earn, on average, the equivalent of $7.30-$7.40 before retentions, comprising milk price plus distributable profit (per share held).
On a cash basis, the same farmer is forecast to receive a total of $7.15-$7.25, comprising milk price and dividend per share with the balance of the profit being retained by the co-operative.
Fonterra's board of directors also estimate fair value share price for the next season in 2011/12 at $4.52; the same as the current season's price.