27 Feb 2015

Farmers call for bigger Fonterra payout

9:00 am on 27 February 2015

Dairy farmers think Fonterra should be increasing its dividend this season, especially in view of the low milk price.

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Photo: RNZ

The co-operative is holding its forecast payout at the current level of $4.70 per kilo of milk solids, while it waits for a further lift in international dairy prices.

It is also keeping the predicted dividend on its shares at the current range of 25 to 35 cents a share.

Last season, when the milk price was at a record level, it paid a dividend of only 10 cents a share.

Federated Farmers dairy chair Andrew Hoggard, a Fonterra supplier, said most farmers argue that the dividend should be a lot higher this season.

"Given that if you're buying Fonterra shares to supply the company, the interest on that capital outlay will be higher than the return you'll get from them, so farmers are looking for that dividend to improve over time," he said.

"We know there's an historical factor as to where they are at the moment. The company appears to be making the right moves, in terms of increasing that dividend, and increasing the value of our milk, but farmers I speak to do want to start seeing that dividend return lifting."

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