Fonterra Sets Record with Fixed Milk Price Allocations for 2024/25
Source: DairyNews.today
Fonterra has set a new record with its Fixed Milk Price (FMP) programme, allocating 120 million kilograms of milk solids (kgMS) for the 2024/25 season—the largest total since the programme’s launch in 2019. The milestone reflects increasing farmer confidence in Fonterra’s strategy to provide income stability amid market volatility.
Rising Farmer Confidence
The FMP programme, designed to help farmers manage market risks, continues to gain traction. For the 2024/25 season, 1,778 farms submitted nearly 3,500 applications, up from the previous year.
Lisa Payne, Fonterra’s Director of Milk Supply, praised the record achievement, saying, “The Fixed Milk Price programme provides farmers with a valuable tool to navigate the uncertainties of dairy markets. Reaching this milestone highlights the programme’s growing importance for our suppliers.”
Farmers locked in prices ranging from $8.09/kgMS to $10.10/kgMS, with a service fee of 10 cents per kilogram applied. High demand during the April and August application windows exceeded allocation limits, underscoring the programme’s popularity.
Market Dynamics and Impacts
The record allocation aligns with a dynamic global dairy market. Recent Global Dairy Trade (GDT) auctions showed fluctuations, with whole milk powder prices rising 4.1% to US$3,984/MT before dipping slightly at year-end.
China, a major market, has influenced price movements with stockpiling ahead of Lunar New Year celebrations. Fonterra has projected farmgate milk payouts of up to $9.50/kgMS, potentially setting a co-operative record.
CEO Miles Hurrell noted, “Demand from China has shown encouraging signs, with domestic production appearing to lag expectations.”
Strategic Significance
The FMP programme is central to Fonterra’s strategy, not only supporting farmers but also enhancing its market positioning. By securing predictable milk prices, the co-op can offer long-term contracts and risk management solutions to its customers, which Payne emphasized as a key advantage.
“These solutions are a major reason some customers choose Fonterra as their supplier,” Payne said, highlighting the mutual benefits for farmers and the co-operative.
Looking Ahead
Fonterra is already exploring enhancements to the programme, with updates expected before the next application window in March 2025. The co-operative’s broader strategy includes divesting some global consumer businesses, such as Anchor and Mainland, to focus on its core dairy operations.
The record-setting Fixed Milk Price allocations underline Fonterra’s commitment to innovative solutions that address industry challenges while ensuring financial stability for its farmer-shareholders. As global dairy markets continue to evolve, the programme stands as a model for balancing opportunity and risk.
The FMP programme, designed to help farmers manage market risks, continues to gain traction. For the 2024/25 season, 1,778 farms submitted nearly 3,500 applications, up from the previous year.
Lisa Payne, Fonterra’s Director of Milk Supply, praised the record achievement, saying, “The Fixed Milk Price programme provides farmers with a valuable tool to navigate the uncertainties of dairy markets. Reaching this milestone highlights the programme’s growing importance for our suppliers.”
Farmers locked in prices ranging from $8.09/kgMS to $10.10/kgMS, with a service fee of 10 cents per kilogram applied. High demand during the April and August application windows exceeded allocation limits, underscoring the programme’s popularity.
Market Dynamics and Impacts
The record allocation aligns with a dynamic global dairy market. Recent Global Dairy Trade (GDT) auctions showed fluctuations, with whole milk powder prices rising 4.1% to US$3,984/MT before dipping slightly at year-end.
China, a major market, has influenced price movements with stockpiling ahead of Lunar New Year celebrations. Fonterra has projected farmgate milk payouts of up to $9.50/kgMS, potentially setting a co-operative record.
CEO Miles Hurrell noted, “Demand from China has shown encouraging signs, with domestic production appearing to lag expectations.”
Strategic Significance
The FMP programme is central to Fonterra’s strategy, not only supporting farmers but also enhancing its market positioning. By securing predictable milk prices, the co-op can offer long-term contracts and risk management solutions to its customers, which Payne emphasized as a key advantage.
“These solutions are a major reason some customers choose Fonterra as their supplier,” Payne said, highlighting the mutual benefits for farmers and the co-operative.
Looking Ahead
Fonterra is already exploring enhancements to the programme, with updates expected before the next application window in March 2025. The co-operative’s broader strategy includes divesting some global consumer businesses, such as Anchor and Mainland, to focus on its core dairy operations.
The record-setting Fixed Milk Price allocations underline Fonterra’s commitment to innovative solutions that address industry challenges while ensuring financial stability for its farmer-shareholders. As global dairy markets continue to evolve, the programme stands as a model for balancing opportunity and risk.
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