4 Sep 2015

Strong response to Fonterra's free loans

1:47 pm on 4 September 2015

Fonterra says there has been a strong response to its interest free support loan offer, with 1300 farmers signing up in the first four days.

Fonterra sign

Photo: 123RF

The co-operative's 10,500 farmer shareholders can apply for an interest-free loan of 50 cents for every kilogram of milk solids produced from 1 June to 31 December 2015.

It offered the loan after dramatically reducing its forecast milk payout to $3.85 per kilogram of milk solids, down from $5.25, in August.

Fonterra Group Director of Co-operative Affairs Miles Hurrell said it was still early days but farmers were saying they appreciated their co-op was trying to help them through extremely tough times.

"We're hearing what farmers are going through right now and the $3.85 forecast payout certainly makes things very tough on farm, and so to use the strength of the co-op to come up with a support package has certainly hit the right notes," he said.

"We are working on the assumption we will see most, if not all, farmers take this up by the end of the application period."

Mr Hurrell said Fonterra was making a total of $430 million available for the interest free loans.

The loan will be interest-free until 31 May 2017, after which Fonterra may charge interest.

Farmers can repay all or part of the loan at any time and no security is required over their shares or any other assets.

The loan will be repayable directly from milk payments, and automatic repayments will occur when total advance rate payments exceed $6.

Applications for the loans opened on Monday and will close on 25 September.

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