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The ongoing strengh of world dairy prices is reflected in Fonterra's new forecast milk payout to farmers for the current season.
Fonterra has made a final upwards adjustment to the current seasons payout, from $7.30 to $7.90 and announced a record payout for the coming 2008/2009 season of $7 per kilo of milk solids.
Fonterra Chairman Henry van der Heyden says the forecast payout gives the company "every reason to be confident about the outlook for dairying."
Any payout over $6 is regarded as very high historically.
The new forecast for the current season is made up of a milk price of $7.55 and a value component of 35 cents.
"This is good news for our farmers to have the extra cash flow at a time when they are facing sharply rising input costs, which DairyNZ confirms are up by 32% over the past year. It will also go some way to make up for the production lost this season due to the drought," says van der Heyden.
The payout will inject around $9 billion into the New Zealand economy.
The continued strength of international dairy commodity prices - underpinned by a shortage of New Zealand production due to the drought - a weakening New Zealand dollar, and performance gains within Fonterra are all key reasons for the payout.
Fonterra's final payout for 2007/08 will be announced in September.
