Farmer incomes to drop 24 percent - Fonterra

Fonterra has announced a revised milk price projection for the coming season that will shear 24% off farmer payouts compared to last season.

The $6.00 forecast is a 60c cut to the last official announcement in September, which was $6.60.

It will consist of a milk price of $5.60 per kgMS, down 65c, and a value return forecast of 40c per kg/ms, a 5c increase.

Fonterra hasn’t made any announcement about how much of that 40c will be held back as retentions.

For the average farmer supplying 112,000 kg/ms, this means their income for next season will drop $212,000 compared to last year – a 24% decline.

Fonterra attributes the cut to a 24% cut in international commodity prices.

The price also takes into account the huge fall in international whole milk powder prices, which averaged $US4300MT/FAS last year. Since August, this is now hovering around $2600.