New Zealand dairy giant Fonterra promised to bring forward dividends on Wednesday, as the same slide in milk prices that helped it more than double first-half profit continues to eat into revenue for the co-operative's farmer-shareholders.
"There's unprecedented pressure on them (farmers), it's very tough for those families," said Fonterra chairman John Wilson. The firm earlier reported lower milk purchase costs helped its July-December net profit jump 123 percent to NZ$409 million ($276 million), in line with estimates.
Slowing economic growth in New Zealand's top export market, China, and a global oversupply of milk products have seen dairy prices plummet from 2013's records. That has left Fonterra's farmer-shareholder base dealing with drastic drops in income over the last two years.
On Wednesday Fonterra said it was bringing forward dividend payments to provide cash faster to struggling farmers. It said it planned two payments of NZ$0.l0 cents each in May and August, in addition to its interim dividend of NZ$0.20 in April, double its interim dividend a year earlier.
"Overall I thought the results provided very little for farmers to get excited about," said Susan Kilsby, dairy analyst at AgriHQ.
Fonterra earlier this month reduced its forecast farmgate milk price to NZ$3.90 per kilogram of milk solids (kgms) from NZ$4.15 per kgms, in another blow to farmers after plummeting milk prices had slashed their collective incomes by billions in the past two years.
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