Fonterra maintains milk volume forecast

Fonterra Co-operative Group Limited has maintained its milk volume forecast for the 2015-16 season at 1,589 million kgMS, which is in the range of 2-3 per cent lower than the amount collected last season.

Fonterra is required under the Dairy Industry Restructuring Act to update its current season forecast milk volumes by early September.

Group Director Co-operative Affairs Miles Hurrell said although Fonterra had forecast a 2-3 per cent decline in volumes there was evidence that farmers were pulling back on production, which could lead to a further downward revision of forecast volumes as we move through the season.

"Farmers are responding to the lower forecast Farmgate Milk Price by returning to more traditional farming practices. They are reducing the use of feed supplements, and lowering stocking rates per hectare as they concentrate on utilising pasture.

"Market data from several independent sources show that cows are being culled at higher rates than last season while many of our farmers are also providing early advice that they are expecting significant year on year volume reductions.

"In addition, currently our daily milk collection average is lower than for the same period last year," said Mr Hurrell.

"However, it is still early in the season, and any forecast at this point is very dependent on weather conditions, which have so far been poor for production.

"Given these variable factors, we have decided to maintain our current forecast milk volume at this very early stage of the season," said Mr Hurrell.