Fonterra decision closer
regulations for Fonterra and protects the long-term interests of farmers, consumers and the wider economy.
Wilson acknowledged the buoyant milk price had a significant impact on returns in Fonterra’s consumer, speciality ingredients and food service businesses.
‘‘Earnings are down on where we had expected them to be because our margin is down. It’s great for farmers but it’s creating volatility in our shareholder and until holder market. We need to build confidence in our share and unit market and the volatility isn’t helping.’’
Gross margins declined to 16 per cent from 18 per cent for the first nine months of the year, compared with the same period last year.
Referring to farmers’ concerns over the introduction of limits over the use of palm kernel expeller (PKE), Wilson said they had had a year to adjust.
‘‘Some will have to make further adjustments to their systems, but Fonterra’s ability to efficiently process dairy fats into cream products is so important. For the first time ever dairy fats are worth more than dairy proteins and to ensure we can manufacture efficiently we need milk of a certain profile.’’
Wilson said the interest-free loans scheme offered to farmers by Fonterra from October 2015 had been an ‘‘outstanding success’’.
‘‘By this September it will be all paid back. Farmers pay it back when the milk price goes above $6, it comes off their milk cheque,’’ Wilson said.