Fonterra has set aside $14 million to cover liabilities flowing from its botulism contamination alert and product recall, but anticipates that the cost could go higher.
The co-operative ordered a precautionary recall of some whey protein concentrate at the beginning of August, after test results indicated some batches may have been contaminated with botulism causing bacteria.
The alarm was lifted after further tests gave the all-clear, but Fonterra has already made changes to its operations following a review and it has an independent board inquiry running.
Chairman John Wilson says the initial costs of the recall and follow up action show up in its 2012-13 financial results, announced on Wednesday.
He says those costs come out of Fonterra's earnings, so it does affect the money available for milk payouts to farmers.
Fonterra has declared an 18% increase in its after tax net profit of $736 million for the past year, despite a 6% drop in revenue and a lower operating profit.
It has confirmed farmers will receive milk and dividend payments totalling $6.16 per kg of milk solids for the past season, but it is also retaining 14 cents per kg above that.
