There are signs of stability in the dairy sector as Fonterra announces its latest total forecast payout at $4.55 per kilogram of milksolids.

This comes as good news for dairy farmers who have suffered from uncertainty in recent months over the payout amount. This was due to a strengthening New Zealand dollar and reduced international demand. However, these factors have balanced the ledger for Fonterra with a 10 cent increase in profit compensating for a fall of 10 cents in the world milk price.
Fonterra chairman Henry van der Heyden says there is good cause for optimism in the sector now though owing to the milk price.
'Along with other exporters, we've been hurting with the New Zealand dollar up around 65 cents against the US dollar. The fall in our milk price forecast would have been larger if we hadn't seen what are some early and encouraging signs in international markets.”
Fonterra CEO Andrew Ferrier also says that some of their business initiatives are playing a role in achieving this payout.
'We're also running a very tight ship, looking at every opportunity to reduce operating expenses and free-up cash for our business priorities. That means we have some capital constraints but the flip side is that, with inflationary pressures easing and lower interest costs, we're starting to see the payback from this disciplined effort across the business.”