The prices will be reduced from $5.60 per kilogram of milk solids to $5.00 per kgMS.  In addition to this announcement, Fonterra announced the Fonterra Australia Support Loan that will offer a loan of up to 60c per kgMS repayable from the 2018 financial year onwards.

Fonterra Oceania managing director Judith Swales said the price change reflected the reality of the supply and demand imbalance that is affecting global dairy commodity prices, compounded by the recent strength of the Australian dollar. “The reduction in the farmgate milk price is the last thing farmers want to hear – however, it is unlikely to come as a surprise. “Fonterra is committed to taking a leadership position to drive towards more transparency on milk price so that farmers have a clear line of sight to budget, plan and respond,” Fonterra has continued to meet its commitments and honour the agreement with its suppliers through the BSC Milk Supply Agreement.