The performance during the six-month period ending 30 November leaves the group with NZ$4.5bn (€2.3bn) to payout to its farmers members, and puts it in a strong position to push for further growth, Fonterra said yesterday. Company chief executive officer Andrew Ferrier said the strong performance of Fonterra's entire business was performing ahead of expectations, allowing it to offset higher production costs for its operations. He added that the company was now in a strong position to deal with a slight softening in dairy prices that began in December following global commodity increases. "While prices are easing somewhat as supply increases in response to these higher prices, we do not anticipate there will be any sharp falls given the overall strength of the market and other factors such as the demand for grain and its use in biofuels," he stated. Higher commodity prices drove the group's total cost of sales, which include supplier payouts, by NZ$1bn (€527m) over the same period last year to NZ$6.4bn (€3.3bn). However, total operating expenses, which include sales and marketing, administration and other operating costs, were NZ$841m (€443m) for the six months ended November 30 2007, compared to NZ$860m (€453m) in the prior year. The company said it was also encouraged by the performance of its suppliers over the period, as total milk production rose by 2.5 per cent over the same period last year, despite cold wet conditions in some North Island regions ahead of the peak season. Fonterra is one of the top six dairy companies in the world by turnover and the leading exporter of dairy products, controlling about a third of international dairy trade.