Fonterra, after reporting a solid profit, remains cautious due to global geopolitical factors affecting tariffs. Encouraged by an anticipated strong milk payout, potential challenges loom.
Following a robust half-year result, Fonterra admits that it remains on alert due to geopolitical events that are beyond its control. Chief Executive Miles Hurrell emphasizes the integrated nature of the co-op’s operations across the globe and the uncertainty posed by potential tariff impacts. He warns farmers that “we live in a volatile world” as Fonterra prepares to release its 2025-26 season forecast milk price in May.
DairyNZ predicts a $10.13/kgMS payout for the new season starting June 1, with Fonterra maintaining a forecast of $10/kgMS for the current season. If realized, this would mark a break in the longstanding trend of a significant drop following high dairy payouts.
While Hurrell is optimistic about another solid season, he advises caution concerning geopolitical events. He reports an 8% rise in profit after tax to $729 million and a 16% increase in operating profit to $1.1 billion, indicating Fonterra’s strong financial positioning against these challenges:
“We compete in most global markets, so tariff changes impact broadly,” Hurrell states. He expresses confidence in navigating these uncontrollable factors, supported by the co-op’s robust interim results and strategic product portfolio optimization.
Fonterra forecasts a 2.7% rise in milk collection this year, hitting 1,510 million kgMS, attributed to favorable pasture growth early in the season despite current dry conditions. Storey’s advice carries a caveat that international variables, especially those outside farmers’ immediate influence, profoundly affect cost-return dynamics during the season.
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