Fonterra’s decision to not pay a dividend for the rest of the year has “blindsided” shareholders, says Federated Farmers.
On Friday, the co-operative announced that the farmgate milk price paid to farmers will drop by five cents to $6.70 a kilo of milk solids.
Shareholders were paid 10 cents per share in April and had expected additional earnings, but Fonterra says it’s unlikely that they will receive anything more this year.
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Federated Farmers chair Chris Lewis told RadioLIVE that he didn’t expect the announcement at all.
“I had a lot of media ring me and ask ‘what do you know’? And I knew nothing.”
Rural Exchange co-host Hamish McKay estimates that the average farm will lose between $8,000 and $10,000 for the 2017-18 season, and Mr Lewis agrees.
“I’m sure a lot of farmers have worked it out and are thinking ‘shit’,” said Mr Lewis.
Fonterra lost a giant $348 million at the beginning of the year due to a compensation payout to French company Danone and a write down of its investments to Chinese company Beingmate.
Watch the full interview with Chris Lewis above.