Fonterra to lift prices in Australia

Fonterra will increase milk prices paid to farmers in Australia, where it is completing a buyout of Bonlac Foods.

It said yesterday milk prices would increase by 7Ac a kilo of butterfat and 17Ac a kilogram of protein.

The additional payment will be backdated to July 1 and paid to farmers, including those supplying Melbourne-based Bonlac, on September 15.

Fonterra has promised to match milk prices offered by other dairy companies to stem the loss of farmers to higher-paying competitors. This week, Bonlac's 1500 farmer-suppliers voted 94 per cent in favour of Fonterra's plan to buy the 50 per cent of Bonlac it does not already own.

"Fonterra is committed to the Australian dairy market and we recognise that a strong relationship with our suppliers is an important foundation for our business," Fonterra chief executive Andrew Ferrier said.

The Commonwealth Bank of Australia's New Zealand dairy index, which tracks US-dollar export prices for cheese, butter and milk powders, reached a record high of 136.29 on July 8 and has gained 9.3 per cent in the past 12 months.

Fonterra said it expected to complete the Bonlac transaction on September 1.

- Bloomberg