Fonterra is "confident" it can get another double-digit payout over the line after handing farmers a record $10.16 for each kilogram of milk solids produced in 2024-25.
Last season will go down as a record year for the dairy co-operative after the highest-ever payout was combined with a record dividend of 57 cents per share. This topped the $9.30/kg payout of 2021/22.
Overall, a total $10.73/kg was paid to farmer shareholders for a record $16.2 billion in cash payments.
A full-year result released recently included $26b in revenue, up 15%, on just over 1500 million kilograms of milk solids collected over the period - up 2.6%.
The only let-down was that its profit after tax of $1.1b was back 4% for the financial year ending July as a result of a higher tax expense.
Furthermore, the co-op’s unchanged $10/kg midpoint forecast for this season, based on a $9/kg to $11/kg range, appears reachable.
Federated Farmers’ dairy chairman Karl Dean said the past season had been a good result for Fonterra and dairy farmers.
"A strong milk price, strong dividend is, all in all, very positive for New Zealand’s dairy farmers and the economy. It is indeed a record payout and, this year, is still looking very strong at the moment with no change in the forecast milk price for the 2025/26 season which is always a good thing to see."
He said farmers faced a waiting game as rising global milk production normally followed higher milk prices to put pressure on payouts.
Chief executive Miles Hurrell said he was confident the co-op could reach a $10/kg milk price based on its contract position a quarter of the way through the season.
There was uncertainty in the international market, but he was not concerned at this stage by extra milk appearing overseas as demand remained strong.
"While we have seen the market come back from where it was maybe from a couple of months ago from its peak, we had built that into our pricing from the start, so we are still very comfortable with $10.
"Despite additional milk coming out of North America in particular we are still seeing strong demand, and we just have to watch some of those geopolitics in play."
Most of the extra North American milk would be consumed in their domestic markets, he said.
Mr Dean said farmers appreciated a strong dividend being delivered with a high payout when milk was costlier.
Mr Hurrell said 2024/25 had been one of the co-op’s strongest results for shareholder returns.
