Bay of Plenty Federated Farmers president John Scrimgeour says Fonterra's record payout for dairy farmers comes as a help for the region's Psa stricken rural economy.

Fonterra has announced farmers are to receive a record payout of $8.25 per kilogram of milksolids before retentions.

Bay of Plenty Federated Farmers president John Scrimgeour and wife Margaret on their Pongakawa farm.

John says the payout will definitely help the overall local economy.

'It will nullify some of the negative effects, but it doesn't help some of the individual growers, we really feel for them,” says John.

Fonterra say a bumper year for dairy exports and strong contributions from overseas businesses have boosted the company to record results for the 2011 financial year.
The payout is broken down to a Farmgate Milk Price of $7.60 per kg/MS for the 2011 milk season and a distributable profit of 65 cents per share for the 2011 financial year.

The payout is $1.55 ahead of the prior period's $6.70 and exceeds the previous record of $7.90 achieved in 2008.
The cash payout – comprising Farmgate Milk Price plus dividend – of $7.90 is also a record and is $1.53 higher than the prior period's $6.37.

The annual dividend is being increased to 30 cents per share, a three cents per share – or 11 per cent – increase on last year's 27 cents per share.

This means farmers will get $7.95 per kg/MS.

Bay of Plenty Federated Farmers dairy chairman John Howard agrees it is welcome news to dairy farmers and should be for all people across the region.
'It's fantastic – really good news,” says John.

'It's very welcome – it will be a very good boost to the local economy.”

He says the $8 mark is where farmers want to see the payout staying in the future.

'We'd like to keep it up – it's been challenging times and challenging seasons.

'I think it will make farmers happy and we want a continuation really. Hopefully the $8 might become the old $6.”

John says farmers' expenses are still a long way up.

'The expenses haven't come back.”

Fonterra chairman Sir Henry van der Heyden says the record financial performance and record milk production means Fonterra would distribute milk payments and dividends totalling $10.6 billion – $2.4 billion more than in 2010 and $1.5 billion more than Fonterra's previous best year in 2008.

'As Fonterra is a cooperative that is 100 per cent owned and controlled by New Zealand farmers, that money flows right back into the local economy as farmers reinvest in their businesses and buy more farm supplies and equipment.
'An independent report by the New Zealand Institute of Economic Research last December found that the benefits of a higher Fonterra payout extend well beyond farmers, as they spend around 50 cents out of every dollar earned on locally produced goods and services.”

Henry says the record Farmgate Milk Price of $7.60 per kgMS was well up on the prior season's $6.10 and reflected the recent strength of world dairy markets, with prices in some categories reaching or nearing historical highs during the last year.
In addition, Fonterra's hedging policy shielded farmers from the full brunt of a stronger New Zealand dollar, especially over the latter stages of the year.

'We also benefited from record milk production, as some of the best autumn conditions in recent years offset poor weather in many regions earlier in the season.”