Fonterra has announced a record financial result and payout to farmers, saying it will distribute milk payments and dividends totalling $10.6 billion.
Fonterra will make a payout to its 10,500 farmer-shareholders of $8.25 per kilogram of milk solids, before retentions.
That comprises a farm gate milk price of $7.60 for the 2011 milk season and a distributable profit of 65 cents per share for the 2011 financial year.
The payout is $1.55 ahead of the previous period's $6.70 and exceeds exceeds an earlier forecast.
Sales at New Zealand's biggest company totalled $19.9 billion, a new record, due to robust demand from Asia in particular.
The co-operative announced a 13% increase in after-tax profit to $771 million for the year to July.
While business in Asia and the Middle East performed well, Fonterra chairman Sir Henry van der Heyden says earnings fell in Australasia due to intense competition, while earnings in South America remained flat.
He says Fonterra's hedging policy shielded farmers from the full brunt of the strong New Zealand dollar.
Fonterra collected a record 1346 million kilograms of milk solids in the 2011 season and exports totalled 2.1 million tonnes.
However, there has also been a 17% fall in earnings, excluding one-off costs, in New Zealand and Australia. This has prompted criticism from consumers which outgoing Fonterra chief executive Andrew Ferrier believes is unfair.
"I do resent when everybody tries to take a pot-shot all the time ... I just ask New Zealanders a little bit to be proud of their dairy cooperative and their dairy industry," he said on Thursday.
Mr Ferrier will step down on Friday to be replaced by Theo Spiering from the Netherlands.
Farmers spending 'will remain prudent'
Fonterra chairman Sir Henry van der Heyden says the New Zealand economy will benefit from the high payout, as farmers reinvest in their businesses and buy more farm supplies and equipment.
Sir Henry says an independent report shows that farmers spend around 50 cents of every dollar earned on locally produced goods and services.
Federated Farmers says dairy farmers' spending will remain prudent and debt repayment and on-farm maintenance will be priorities.
Dairy vice-chairman Robin Barkla says farmers have had experience of dairy price volatility from one season to the next and are aware that prices have softened slightly in recent auctions.
Mr Barkla says the boost will help farmers strengthen their balance sheets and allow them to begin some overdue maintenance.
However, he says farmers will be cautious about using the payout to plan ahead, as in the past a record payout has been followed by a dramatic crash the next season. He says the past few auctions have been downwards, although just by small amounts.
At this stage, Fonterra is holding its forecast milk payout for the current season at $6.75 per kilogram of milk solids, with a distributable profit range of 40-50 cents per share, for a total payout of up to $7.25.
It says the lower forecast farm gate milk price relative to 2011 reflects a softening of global commodity prices since early 2011.
