Fonterra revises its 2021/22 forecast Farmgate Milk Price

9 May 2022

Fonterra revises its 2021/22 forecast Farmgate Milk Price

Fonterra Co-operative Group Limited today revised its 2021/22 forecast Farmgate Milk Price range from
$9.30 - $9.90 per kgMS to $9.10 - $9.50 per kgMS.
This reduces the midpoint of the range, which farmers are paid off, from $9.60 per kgMS to $9.30 per
kgMS.
Fonterra CEO Miles Hurrell says the change in the forecast Farmgate Milk Price is due to a number of
recent events which have resulted in short-term impacts on global demand for dairy products - in
particular, the lockdowns in China due to COVID-19, the economic crisis in Sri Lanka and the Russia-
Ukraine conflict.
“While the long-term outlook for dairy remains positive, and we expect global demand and supply to be
more balanced over the rest of the year, we have seen these short-term impacts flow through into pricing
on the Global Dairy Trade (GDT) platform. For example, average prices for whole milk powder (WMP), a
key driver of the milk price, have decreased by 18% over the past four GDT events.
“As an exporter to 140 countries we deal with these kinds of global events all the time, but right now we’re
seeing the impact of multiple events. Coupled with inflationary pressures, it’s not surprising to see buyers
being cautious.
“Our scale and ability to move products between different markets and categories remains important, and
reinforces our strategic focus on ensuring our milk is going into the highest value products.
“This will be disappointing for our farmers, but the change in global dairy prices is coming off record high
levels. At a midpoint of $9.30 per kgMS, this would continue to be the highest forecast Farmgate Milk
price in the Co-op’s history and would see us contribute almost $14 billion into New Zealand’s economy
through milk price payments, which supports the wellbeing of our local communities.
“Looking out to the rest of the year, global milk production is expected to remain constrained as high feed,
fertiliser and energy costs continue to impact production in the Northern Hemisphere, and we expect
demand to recover as the short-term impacts begin to resolve.
“While there is still a high level of uncertainty in global markets, the majority of our milk has been
contracted for the season. It’s for this reason that we’ve made the decision to narrow our forecast range to
+/- 20 cents.

Fonterra Co-operative Group
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“As always, there are a number of risks we are continuing to keep a close eye on, including potential
impacts on demand from inflationary pressures and rising interest rates, increased volatility as a result of
high dairy prices, and further disruptions from COVID-19 and geopolitical events.”
ENDS
For further information contact:

Fonterra Communications
Phone: +64 21 507 072