New Zealand’s dairy firm Fonterra Co-Operative Group said on Thursday it expects to pay a lower price for milk to its farmers next year, as a volatile global environment poses risks to its business, reported Reuters.
Fonterra expects to pay between NZ$8.25 and NZ$9.75 ($5.34 – $6.31) per kilogram of milk solids (kgMS) in the coming financial year 2022-23, the mid point of which is 3.2% lower than this year’s forecast.
The firm will be impacted by further challenges from market and currency volatility, global inflation and a tightening labour market, in addition to a potential hit to demand from higher dairy prices, said Chief Executive Officer Miles Hurrell.
“This is why our 2022/23 forecast range is so wide at this point in the season,” Hurrel added.
The dairy firm, however, maintained its forecast for the price it pays farmers for milk in the 2021-22 season at NZ$9.10 to NZ$9.50 per kgMS.
Fonterra said sales volumes and profit dropped over the last nine months hit by lower demand due to the recent COVID-19 lockdowns as well as the impact from Sri Lanka’s economic crisis and the Ukraine war.
The company said normalised profit after tax fell 19.6% to NZ$472 million for the nine months ending 30 April.
Source: Reuters
