Fonterra farmers have a message for their co-operative – they need to see consistently strong performance in both payout and returns from share ownership.
Fonterra Co-operative Council chair John Stevenson says that rising costs have had a real impact on farmers’ bottom lines.
“We can see that with the latest DairyNZ breakeven milk price being above $8/kgMS,” Stevenson told Rural News.
“Many farmers have reported to us that they have felt significant financial pressure over the last 24 months. Fonterra needs to execute on their revised strategy to ensure that our returns are well above our costs.
“Council will be keeping a keen eye on how Fonterra delivers on its six strategic devices.”
Last week, Fonterra released a revised strategy, promising to deepen its focus on its high-performing Ingredients and Foodservice businesses to grow value for farmer shareholders and unit holders.
Revised targets are increasing average return on capital to 10-12%, up from 9-10%, a new dividend policy of 60-80% of earnings, up from 40-60%, while remaining committed to maintaining the maximum sustainable Farmgate Milk Price.
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