Fonterra Cooperative Group, the world's biggest dairy exporter, has raised its forecast pay-out to farmers as global demand for milk powders remains strong, while holding its expectations for a reduced dividend.
The Auckland-based company expects to pay $8.65 per kilogram of milk solids to farmers in the 2013/14 season, up from a previous forecast of $8.30 per kgMS, it said in a statement. The dairy company held its forecast dividend of 10 cents per share.
The increase is 70 cents lower than what it would be using calculations from regulated milk price manual, carrying on Fonterra's decision to pay a lower price due to the production mismatch when prices for its whole and skim milk powder surged ahead of its higher margin products such as cheese and butter.
"The increase reflects continuing strong demand for milk powders globally," chairman John Wilson said. "The board has the discretion to pay a lower Farmgate Milk Price than that specified in the manual, if it is in the best interests of the cooperative."