23 Feb 2010

Fonterra changes payments to drive investment

3:14 pm on 23 February 2010

Fonterra is hoping its moves to revamp the way farmers are paid for supplying the company will help to drive investment in the co-operative.

Instead of combining the value of the milk with returns from investments, Fonterra will set a price level for the milk and then pay a dividend.

Earlier this year the co-operative offered its shareholders the opportunity to buy more shares than they needed to in order to match their milk supply.

About one third of Fonterra's farmers took up the offer, and Fonterra director John Wilson says separating the milk price from the dividend is likely to shape farmer's decisions about this in the future.

Mr Wilson says any review and subsequent changes to the milk price within a season will be announced by the co-operative as it has been to date.