Fonterra’s farmer-owners, struggling with two low milk price seasons in a row, can apply for an interest-free loan of 50c for every kilogram of share-backed milksolids produced from June 1 to December 31 this year. The loan will be interest-free until May 31 2017, after which the big cooperative may charge interest.
Fonterra’s milk price for this season is $3.85kg milksolids, for many farmers significantly below the cost of production.
And while the average price on Global Dairy Trade auctions have bounced back twice in succession in recent weeks after a string of steep declines, the price, particularly of milk powders, Fonterra export staple, is still significantly below what Fonterra needs to meet its payout forecast, say analysts.
Applications for the loans close on September 25.
The loan scheme is expected to cost Fonterra around $430 million, which it says will be funded by one-off savings generated by changes the business is making.
Fonterra said its field teams are helping farmers with their applications and encouraged farmers to apply early so there is no risk of anyone missing out on the first payments in October.
