Communication to Fonterra farmers

1 September 2020


Communication to Fonterra farmers

The attached communication was provided to Fonterra Co-operative Group Limited farmers by the
Chairman, John Monaghan, on 1 September 2020.

-ENDS-.

For further information contact:

Fonterra Communications
24-hour media line
Phone: +64 21 507 072

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CHAIRMAN’S EMAIL
1 SEPTEMBER 2020

Subject: Update from the Chairman: DIRA Milk Price review
Email:
Dear [name]
To support our obligations under the Dairy Industry Restructuring Act (DIRA), the Board has
reviewed the 2020/21 forecast Farmgate Milk Price range.
We have maintained the previous forecast range of $5.90 - $6.90 per kgMS which was
announced last month.
The Advance Rate will still be set off the mid-point of $6.40 per kgMS. You will find a copy of
the unchanged Advance Rate schedule [here].
The global market is finely balanced at the moment, with both demand and supply increasing
but it has the potential to change.
There is good demand in market at this stage of the season, however, the forecast economic
slowdown is likely to increase global unemployment and reduce consumer demand. The
potential for additional waves of COVID-19 is also impacting the confidence of some of our
foodservice customers.
On the supply side, global milk production has bounced back stronger than expected and
volumes in the key dairy production regions of the EU and USA are anticipated to be up on
last year.
At this early stage of the season, any movement in the market can have a significant impact
on our Milk Price. For that reason, we recommend caution with your on-farm financial
decisions.
We will confirm the final Farmgate Milk Price for the 2019/20 season as part of our Annual
Results on 18 September.
John.