Fonterra Cooperative Group has raised its forecast payout to farmers by 75 cents per kilogram of milk solids as dwindling production in Europe, Australia and New Zealand in the face of firm demand has helped rebalance global supply and demand. Dairy prices rose for a seventh time in eight auctions this week as dwindling supply in the face of robust demand boosted competition to secure product. New Zealand's rural sector has been recovering from last year's slump in dairy prices which saw the 2016 payout below what dairy farmers need to break even, stretching their balance sheets for another season. Fonterra today said its first-quarter revenue rose 6% to $3.8 billion, outpacing a 2% increase in the volume of sales to 4.9 billion liquid milk equivalents, on a gross margin of 22%. The company forecasts annual milk collection to fall 7% to 1.46 billion kgMS, which chief executive Theo Spierings said was stifling sales.

Source: Otago Daily Times November 18, 2016 01:44 UTC