Fonterra’s first two fixed milk price events for the 2024-2025 season saw an estimated combined 800 farmers send in applications.
The first event in March saw 100 farmers apply for a fixed milk price offering of $8.09/kg MS. The event had 20 million kg MS made available with the farmers applying for 3 million kg MS.
The most recent event in April saw 700 farmers apply for a total of 33 million kg MS with 30 million kg MS made available.
This offering was for $8.51/kg MS.
Both months’ applications were accepted with Fonterra able to accept up to an additional 10% of milksolids if it was oversubscribed.
Fonterra milk supply director Lisa Payne said the results show that the changes the co-op introduced this year to its fixed milk pricing are already making a positive difference.
“Fixed Milk Price is a price risk management tool that we offer farmers with the aim of helping them with budgeting and planning by providing certainty for a portion of their revenue.
“It also helps us lock in longer term contracts with key customers who value price certainty for the products they buy from us, and the premiums we receive from those contracts in turn benefit all shareholders of the co-op.”
“For the monthly event in April, we made 30 million kg MS available to Fonterra farmers. That’s double the amount of the highest monthly offering last year.
“Thanks to the changes we’ve introduced, we were able to accept all applications in full despite the event being oversubscribed. Last year, we wouldn’t have been able to do that.”
Payne said the undersubscribed March event is not unusual.
“It’s not uncommon to see swings in participation rates like this from month to month – the main thing for us is that it’s accessible and there as an option for when farmers want to use it.”
