27 Feb 2014

The dairy bonanza just gets better

5:30 pm on 27 February 2014

An already good year for most of the country's dairy farmers is turning into an even better one.

Jersey cows in a herringbone milking shed in Waerenga.

Jersey cows in a herringbone milking shed in Waerenga. Photo: PHOTO NZ

Fonterra has lifted its forecast farmgate milk price for the season by another 35c a kilo of milk solids, to a new record of $8.65.

But it's keeping the dividend forecast at 10c a share after slashing it from 32c in December. That will be reviewed when the company announces its half-year financial results next month.

Farmers are now in line for a forecast cash payout of $8.75 for the season ending in May.

The lift in the milk price is driven by the seemingly insatiable world demand for milk powders.

In fact, the new record forecast is still 70c a kilo below the farmgate milk price that had been calculated under Fonterra's milk price manual. Chair John Wilson says that's because other products such as cheese and casein are fetching lower prices than the powder prices that the calculations in the manual are based on.

Mr Wilson says that in line with the higher forecast milk payout, the monthly advance payment to farmers has also been boosted by another 25c to $6.05 a kilo.