The New Zealand-based co-operative, which the world's biggest exporter of dairy products, is required to consider its farm gate milk prices every quarter as a condition of the Dairy Industry Restructuring Act (DIRA).
According to Fonterra chairman, Sir Henry van der Heyden, the farm gate milk price forecast revision came as a result of the continuing strength of the New Zealand dollar.
“We’ve actually seen improving prices in recent GlobalDairyTrade (GDT) trading events, but the strength of the Kiwi dollar is eroding any gains,” said van der Heyden.
According to Federated Farmers, which represents the interests of farmers in New Zealand, Fonterra’s farm gate milk price revision “wasn’t completely unexpected.”
“Most farmers would have prepared two budgets based on a mid and low five dollar payout. Farmers should now realign their lower end budgets down to five dollars. I really hate to say it, but I’d dust off those emergency budgets from 2008/09 for added pointers,” said Federated Farmers chairman Willy Leferink.