A fresh look at Winter Milk

If winter milk is an option for you, the new winter milk contract announced by Fonterra will provide increased flexibility, the ability to generate additional returns, while also providing the milk required by the Co-operative to meet customer demand.

Over the past 6 months there has been a thorough and detailed look at the winter milk programme at a national level, including the demand for winter milk, the supply trends and the exciting growth projections in value add businesses. There were also a series of farmer focus sessions carried out with existing winter suppliers, to get their advice on reshaping the programme to make it more flexible and user friendly. 

WHAT'S CHANGING

Stepped premiums: Introducing stepped premium payments for contracted and un-contracted winter milk, recognising when milk is needed the most. The high step payment for contracted will be $3.50 per KgMS in the North Island and $4.25 per kgMS in the South Island. 

Winter milk period: Reducing the supply period from 92 to 61 days for contracted winter milk, with the contracted winter milk premium increased to reflect this change, and increasing the un-contracted winter milk period to 61 days. In the North Island the winter milk period starts on 16 May while in the South Island it starts on 1 June. 

Under and over supply of contracted volumes: Creating a new buffer system for daily quota volumes. This means you will get the full contract rate for milk you supply over your contracted volume, up to a point, and can fall to some extent below your contracted volume without financial consequences.

Winter Premium (Un-contracted) Milk: Extended the period we pay for Winter Premium (un-contracted) milk so that it matches the period for contracted milk supply. Also introducing a stepped payment for Winter Premium milk - the high step payment will be $1.20 per KgMS in the North Island and $1.40 per kgMS in the South Island. 

These positive changes make it easier for your clients to maximise their winter cashflow and support the Co-op to meet increased customer demand. 

If you have any questions, or want to see how a Dairy Barns Systems could help with winter milk, please do not hesitate to get in touch with us.

Article information courtesy of Fonterra and New Zealand Farm Source.