The board will decide next month whether to extend the package beyond December, depending on market conditions.
The loan is interest-free for two years and doesn't have to be repaid until the farmgate milk price or advance rate hits above the $6/kgMS mark. The forecast payout for the 2016 season is $4.60.kgMS.
One unitholder raised concerns over a $3 billion increase in Fonterra's borrowings in the 2015 financial year and Paravicini said the increase reflected the investment the group had made for the future and included the $750 million it paid for a 18.8 per cent stake in Beingmate in its number one market, China.
Fonterra has said its debt to equity ratio of 49.7 per cent at the end of the 2015 financial year also included $900 million advance payments made earlier than normal to farmer suppliers to help tide them through a second season of low payouts. The debt to equity ratio is expected to be back to normal levels of between 40 per cent to 45 per cent by the end of the 2016 financial year, with borrowings back under $6 billion. Capital expenditure has been restricted to $900 million this financial year.
If you believe, as I do, that the fundamentals of dairy are strong, the fund is well-placed to deliver to you as investors
Fund chairman John Shewan, who stood for re-election for the first time since the fund was set up three years ago, said it had achieved what it was set up to do although the past year had been challenging in terms of returns. Unitholders were paid a 25 cent dividend last year while 35 cents to 45 cents has been forecast for the 2016 year.
"If you believe, as I do, that the fundamentals of dairy are strong, the fund is well-placed to deliver to you as investors," he said. Shewan said he was optimistic looking ahead, and more so after the Fonterra annual meeting on Wednesday and the stronger performance outlined last week from the first quarter results.
"I support the strategy laid out and the steadfast determination to say on course with that strategy," he said.
Some unit-holders expressed concern that the current unit share price of $5.45 is below the $5.50 it was when the fund was established three years ago.
Paravicini said the unit price reflected sentiment towards the current low dairy prices and increased volatility. He hoped the higher earnings per share the company expected to deliver this year would help lift the unit price.
Shewan said he was also disappointed with the unit price, which has fallen from a high of $6.22 during the year, but was pleased to see the units had high liquidity and that the fund was the most frequently traded listing on the New Zealand Stock Exchange in the past year. That meant there was less impact on the unit price when unit-holders bought and sold, he said.
There are 97 million units on issue, which account for 6 per cent of overall Fonterra shares.
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• Hope rises for dairy prices next year
The fund composition has changed during the year with an 18 per cent drop in institutional investors, who comprise 34 per cent of the fund, and a 15 per cent rise in retail investors to 55 per cent, including a number of private wealth managers buying on behalf of their clients. The rest is held by farmers.
Fonterra's director of capital markets, Simon Till, said it was not unusual to get that sort of variance in the category of unit-holders within a year but it was "positive to see the increased interest by the retail sector of New Zealand."
Fonterra chairman John Wilson and chief executive Theo Spierings reiterated what they told farmer shareholders at their annual meeting on Wednesday, including that earnings before income and tax for the 2016 financial year is expected to be at record levels owing to a shift from increasing volume to more value-added product and lower milk input costs in New Zealand.
Spierings said low global dairy prices remained a concern though indications from the futures market was that there could be a reversal in recent declines on the GlobalDairyTrade platform at next week's auction. "We'll have to wait and see," he said.
New Zealand whole milk powder futures contracts have rallied since the last GlobalDairyTrade auction, suggesting prices for the commodity may gain between 6 to 10 percent at next week's auction.
"The majority of contracts have had quite a decent lift since the last GDT," said OMF commodities dealer Karl Arns. "I would expect something in the range of 6-to-10 percent across whole milk powder contracts."
Prices didn't fall as much as some had expected at the last GDT, giving some traders more confidence in the outlook, he said. The risk of an El Nino drought crimping production and pushing up prices in the first quarter of next year was also underpinning buying interest, he said.
The price for whole milk powder, which is key to Fonterra Cooperative Group's payout to farmers, has declined for the past three consecutive GDT auctions. At the most recent event on November 17, the whole milk powder index sank 11 per cent to US$2,148 a tonne, its lowest level since September 1.
