28 Feb 2014

NZ increases reliance on Chinese cash

2:10 pm on 28 February 2014

China's impact on New Zealand's economic prosperity is continuing to strengthen.

The latest figures show it has cemented its position as New Zealand's top export market, while its insatiable demand for dairy products has led Fonterra to lift its forecast payout to farmers, to a record high.

In its latest update, the country's largest company increased the milk price by 35c, pushing the total payout to $8.75 a kilo of milk solids.

Milk prices continue to remain high, benefiting Fonterra's 10,500 farmers.

Dairy output cements rising reliance on  Chinese imports

Dairy output cements rising reliance on Chinese imports Photo: PHOTO NZ

Its chair, John Wilson, says the increase reflects strong demand for milk powders globally, and limited supply.

But the dividend to investors remains unchanged at 10c a share.

Fonterra cut the dividend by two-thirds in December because the prices of its higher-value products like cheese and casein had failed to keep up with high milk prices, squeezing margins.

Mr Wilson says Fonterra won't review a new dividend figure until next month, when it's due to release its half-year earnings results.