Fonterra early dividend to ease supplier woes

Fonterra has promised to deliver an early dividend payment to help ease some of the pressure its suppliers are feeling from the long-term drop in global milk prices.

Fonterra’s early dividend will benefit its 10,500 farmer-shareholders in New Zealand, who have seen around NZ$7bn (€4.15bn) wiped off their revenue in the past two years due to low prices, according to Reuters.

However, the co-op will not directly assist its Australian suppliers.

News of the early dividend comes just days after Australia’s competition watchdog began investigating recent decisions by Fonterra and Australian competitor Murray Goulburn Co-op to slash farm gate milk prices.

“It continues to be a tough season for our farmers with pressure on farmgate milk price due to supply and demand imbalance in the global dairy market,” said Fonterra

Fonterra, which is to provide its farmgate forecast 2016/17 price later this month, said it would pay a dividend of NZ$0.10 (€0.60) per share in June to help New Zealand farmers struggling with cash flow.

It flagged the early dividend in March. The company’s forecast annual dividend was NZ$0.40c (€0.24) per share.

Australian dairy farmers were angered when Fonterra and Murray Goulburn cut their farm gate prices from A$5.60 (€3.60) per kg of dairy solids to A$4.75 (€3.05) to A$5.00 (€3.22) per kg over the past month.

The Australian Competition and Consumer Commission is examining the timing and notice of the cuts.

A finding of misleading or unconscionable conduct by the commission could expose Fonterra and Murray Goulburn to fines of up to A$1.1m (€708,000).