Fonterra milk production declines in Australia

Dairy giant Fonterra’s milk production in Australia in April has declined to nearly 14 per cent, due to higher production costs and farm exits in key dairy regions.

Fonterra said in a report that the milk production for the past 12 months to April was down 6.1 per cent. Dairy exports lifted 5.6 per cent in April compared to a year ago. This was largely driven by infant formula, whey powder, fluid milk products and cheese.

In New Zealand, milk production was flat compared to 2018. Its output over 12 months increased to 2.2 per cent due to better weather conditions.

The company said Dairy Australia continues to forecast a milk production decline of between 7.0 per cent and 9.0 per cent for the 2018/19 season. In May, Fonterra cut its earnings outlook and closed down its Dennington facility in Victoria. It has also been impacted by dry weather conditions and increasing expenses to continue its factory operation.

The company’s ASX-listed shares were worth $3.71 before trade on Wednesday, having fallen 39 per cent since a more than five-year high in January 2018, AAP reported.

New milk pricing tool

Diary giant Fonterra said in the report that farmers can now use the new pricing tool with Fixed Milk Price, which was announced last year. It offers a $6.75 and a total volume of 15 million kgMS to farmers.

“As a cooperative owned by 10,000 farming families, we are committed to finding solutions that will help our farmers make their businesses more sustainable for the long term,” said Richard Allen, group director of Farm Source.

Fonterra will have 5 per cent of its total milk forecast available for farmers on the Fixed Milk Price.

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