Fonterra, the huge dairy company, said that the payout to farmers for the year 2010 to 2011 will be a record high one. It was a good season, with mild weather in most places and high milk production from most farms. Fonterra is a cooperative company owned by 13,000 dairy farmers throughout New Zealand.
Fonterra made a 13% profit for the year of $771m. Fonterra will pay farmers $8.25 for every kg of milk solids, although 35c of that money will stay with Fonterra to help the company grow. The payout for the last season was $6.70 so this is $1.55 more per kg milk solids. An average dairy farm produces 100,000kg of milk solids annually. The average payout will be about $790,000.
This seems like a big salary for farmers but for many farmers, most of that money will go to the bank to pay off debt. However, other farmers will be able to buy machinery and spend money on maintenance like new fences. Spending by farmers will put money into the local economy, especially in small towns and rural areas.
New Zealand supplies about 30% of the world’s dairy exports. More than 90% of Fonterra’s milk is exported, as milk powder, butter, cheese or other products. There is increasing demand from China and India.
Listen to May 28th 2010 to hear more about Fonterra and dairy farming.
Vocabulary
• Cooperative is a noun or adjective. The verb is cooperate which means to work together. Dairy companies in New Zealand began as small cooperatives in 1871. In 2001, Fonterra was formed from smaller cooperatives.
• Milk solids make milk powder.
Questions
Fonterra says we have to pay the same for our milk as other countries which buy our milk. Do you think we should pay less for our milk in the supermarket?
What are the good and bad points about dairy farming in New Zealand? Would you like to be a dairy farmer?