Fonterra today slashed its payout forecast for this season to 14 percent lower than its original estimates after international dairy commodity prices slumped 24 percent in the past eight weeks.
The new forecast, $6/kg milksolids, is a 60c/kg reduction on its revised $6.60 forecast in September, when it trimmed the original $7 projection.
Last season, Fonterra gave farmers their highest payout payment in 43 years.
In inflation-adjusted terms it paid a record $7.90/kg, which added up to $9.3 billion for its 10,724 farmers -- the equivalent of an average $867,213 for each of them.
Fonterra chairman, Henry van der Heyden said today the record prices of last season were already declining when their slump was exacerbated by the global financial crisis. "Industry and trade activity is slowing down and all the forecasts are pointing to a global recession," he said.
Dairy foods were not immune to the "real tightening" in consumer spending.
Fonterra was due to announce its next forecast review in December, but brought it forward so farmers would know exactly where they stand in budgeting.
source: nzpa
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