8 March 2016
FONTERRA REVISES 2015/16 FORECAST MILK PRICE
Fonterra Co-operative Group Limited today reduced its forecast Farmgate Milk Price for the
2015/16 season from $4.15 per kgMS to $3.90 per kgMS.
When combined with the forecast earnings per share range of 45-55 cents, this means a total
forecast available for payout of $4.35-$4.45 per kgMS and would currently equate to a forecast
Cash Payout of $4.25-$4.30 per kgMS for a fully shared-up farmer after retentions.
Fonterra is forecasting its New Zealand milk production to be at least 4 per cent lower than last
season as New Zealand farmers respond to the ongoing low prices by reducing herd size and
feeding significantly less supplementary feed which is expected to have an impact on this Autumn’s
production.
Chairman John Wilson said difficult conditions in the globally traded dairy market have put further
pressure on the forecast.
“This further reduction in the forecast Farmgate Milk Price is the last thing farmers want to hear in
what is proving to be a very challenging season. At times like this the business needs to do
everything it can to drive every last cent back to farmers.
“Management is fully focused on reducing cost and generating cash right across the business. The
continuing lift in financial performance and our balance sheet strength will provide opportunities to
support our farmers’ cash flows. We will provide an update on this at our interim results on March
23,” said Mr Wilson.
Chief Executive Theo Spierings said dairy exports and imports had been imbalanced for the past 18
months due to European production increasing more than expected, and lower imports into China
and Russia – the two largest importers of dairy.
“The time frame for a rebalancing has moved out and largely depends on production reducing –
particularly in Europe - in response to these unsustainably low global dairy prices.
“The long-term fundamentals for dairy are positive with demand increasing at over 2 per cent a year
due to the growing world population, increasing middle classes in Asia, urbanisation and favourable
demographics.
“Our forecast is based on no significant changes to either supply or demand globally before the end
of the year. However, a reduction in the supply available for export before then could mean prices
recover earlier than currently expected,” said Mr Spierings.

 Fonterra Co-operative Group

Note: currency is New Zealand dollars unless otherwise stated.
- ENDS For further information contact:
Connie Buchanan
Fonterra Communications
Phone: +64 22 698 5602
24-hour media line
Phone: +64 21 507 072
About Fonterra
Fonterra is a global leader in dairy nutrition – the preferred supplier of dairy ingredients to many of the world’s
leading food companies. It is also a market leader with its own consumer dairy brands in New Zealand and
Australia, Asia, Africa, the Middle East and Latin America. Fonterra is a farmer-owned co-operative and the
largest processor of milk in the world. It is one of the world’s largest investors in dairy research and innovation
drawing on generations of dairy expertise to produce more than two million tonnes of dairy ingredients, value
added dairy ingredients, specialty ingredients and consumer products for 140 markets.
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Confidential to Fonterra Co-operative Group

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