Fonterra chairman Sir Henry van der Heyden cut the ribbon at an open day on Friday, on the 200ha farm, south of Te Awamutu. Stewart Ledgard, from AgResearch’s climate, land and environment section, said the farm’s greenhouse gas footprint was expected to be 20 per cent lower than that of the average NZ  dairy farm reports The Southland Times.

He estimated the Tokanui footprint, of 700 cows on 200ha, would be about 740g of carbon dioxide per litre of milk compared to the 900g average. Dr Ledgard said the farm’s greenhouse gas emissions would be measured next year. The future of NZ dairying and its export income depended on raising farm efficiency and lowering greenhouse gas emissions, he said.

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Fonterra shareholders look set this week to approve the first two of three steps of its capital restructuring proposal, but resistance to the third stage, which will be considered next year, is already evident reports The ODT.  Farmer attention has already being drawn to that contentious third step, the trading of shares among farmers, which will not be debated at Wednesday’s annual meeting in Ashburton.

Company and farming leaders appear confident the initial vote on the first two stages – strengthening the share structure and restricting the value of company shares – would get the required support of 75% of voters.  Some have questioned whether Fonterra would achieve its goal of attracting extra capital from shareholders, with farmers more likely to use income from higher milk prices to reduce debt and restore cashflow than buy extra shares.

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The 19% increase in Fonterra’s forecast payout will lift dairy farmers’ incomes by between $1.2 billion and $1.3 billion, economists say, but how much it boosts the wider economy will depend on how much they allocate to reducing debt reports The NZ Herald. Fonterra lifted its forecast payout to farmers to $6.05 per kilogram of milksolids, up from the $5.10 announced in September.

ANZ National Bank economist Kevin Wilson said the increase would return the sector to profitability and reduce stress levels. But with the dairy sector’s debt levels having increased by around $4 billion over the past year, debt repayment would be uppermost in many farmers’ minds, he said.

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Fonterra farmers keen to get an early start on share trading under the big co-operative’s capital restructure plan will have to wait while leaders focus on getting more fundamental housekeeping changes through a shareholder vote next month. It was notable there were calls for all three steps in the five-year programme to be introduced at once, which would mean introducing the third step – share trading between farmer-shareholders – earlier than planned reports the NZ Herald. Company leaders do not want to start discussions on this leg of the restructure until next year. An active market had to be set up and with great care, and the co-operative was not ready.

Chief financial officer Jonathan Mason said in the Friday broadcast Fonterra had $500 million to spend a year. Of this, $400 million was earmarked for essential operating costs, leaving only $100 million to pursue a one-time window of opportunity to boost marketing of the co-operative’s technical expertise and product innovation.

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Fonterra has emerged from dairying’s toughest year in living memory in a buoyant mood. The cooperative was yesterday praising its management of a year in which commodity prices plummeted as farmers produced more milk reports Stuff. It confirmed the payout to farmers for the year to July 31 would be $5.20 a kg of milksolids, well down on the $7.90 record high of the year before.

But it also pointed to a stronger balance sheet, reduced stockpiles and improved performance in adding value to its basic products. With a recovery in commodity prices now underway and a lift in the payout forecast for this year to $5.10, the company’s leadership was upbeat. Chairman Sir Henry van der Heyden said Fonterra’s strategy of “combining a broad business footprint, a powerful sales network, strong customer relationships and valued brands” was delivering more profit to farmers. He said the company had weathered business challenges and market volatility that were probably unique in the lifetimes of anyone involved in dairying.

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The average dairy farmer stands to make an extra $55,000 on the back of the increased pay-out from dairy giant Fonterra reports The NZ Herald. Fed Farmers dairy chairman Lachlan McKenzie said the extra $55,000 gross makes up for the $53,000 loss that the average dairy farmer had last year. “People don’t realise, they think the average farmer is getting a half-a-million dollar income but they have to pay all the wages and bills out of that,” said McKenzie.

He said the loss last year hurt farmers but the increase pay-out from Fonterra will go some way to improving the balance sheet this year. Fonterra announced today that it would lift its pay-out forecast to its farmers by 55 cents to $5.10 per kilo of milk solids. Fonterra chairman, Henry van der Heyden, said the revised forecast for the 2009/2010 season reflected “a sustained improvement in commodity returns and a more positive outlook in international dairy markets.”

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Fonterra has today mounted a second attempt to persuade its 10,700 shareholder farmers to back a capital restructuring plan. The three-step proposal could take care of Fonterra’s capital needs for about the next five years while retaining farmer control and ownership reports The NZ Herald. Fonterra wants to:

* Allow farmers to hold shares equivalent to 120 per cent of their milk production, a 20 per cent increase, with incentives to hold shares even if their production falls;

* Cut the value of the shares because ownership is restricted to cooperative members;

* Later move to trading of shares between farmers, without them first having to be sold back to the cooperative.

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Fonterra announced today the Co-operative’s total forecast payout for the 2009/10 season remains at $4.55 per kilogram of milksolids (kgMS), with a 10 cent increase in profit compensating for a fall of 10 cents in the Milk Price. Fonterra Chairman, Henry van der Heyden, said the NZ Dollar had strengthened significantly against the US currency since the opening forecast in May this year, which assumed an exchange rate of around US59 cents, and was putting downward pressure on the Milk Price. However, on the positive side, Mr van der Heyden said there were tentative signs of strengthening demand and firming prices for some products in international dairy markets. This had been taken into account in the new forecast Milk Price of $4.00 per kgMS – 10 cents lower than the May forecast of $4.10.

“Along with other exporters, we’ve been hurting with the Kiwi dollar up around 65 cents against the US dollar. The fall in our Milk Price forecast would have been larger if we hadn’t seen what are some early and encouraging signs in international markets. Fonterra CEO, Andrew Ferrier, said the 22 percent increase in the forecast profit from 45 cents to 55 cents was the result of continued improvements in the performance of the consumer businesses and lower working capital requirements and lower funding costs. “Our combined consumer businesses are benefitting from shifts into higher-value products, as well as growth in market share in some areas. In addition, acquisitions in Australia are having a positive impact on earnings.

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Fonterra chair Henry van der Heyden has resigned from his seat on the board of stock exchange operator NZX, to avoid ‘perceptions of potential conflict of interest reports The NZ Herald.” NZX chairman Andrew Harmos said in an announcement that van der Heyden resigned “to remove any perceptions of potential conflict of interest with his role as Fonterra chairman.” “Neither NZX nor Mr van der Heyden believed any such conflict actually exists,” said Harmos. “However, the NZX board understood Mr van der Heyden’s desire to erase any such perceptions, especially as Fonterra shareholders considered important matters relating to the Co-operative’s future capital structure.”

Van der Heyden joined the NZX Board in September 2005 and has been Fonterra chairman since 2002. “Fonterra and New Zealand dairy farming are the most important things to me professionally. Dairying has long been a cornerstone of the economy and I’ve spent a large slice of my working life helping to build a sustainable industry for farmers and one that will remain a strong contributor to our economic prosperity,” said van der Heyden. “Over the coming years, Fonterra shareholders will be making decisions on capital structure that will be of vital importance to the Co-operative and indeed to the national economy. I want to ensure that these deliberations are untainted whatsoever by any concerns about the NZX directorship – no matter how misplaced such concerns might be.”

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Fonterra announced today its first payout forecast for the 2009/10 dairy season was NZ$4.55 per kg of milk solids reports interest.co. This was made up of a milk price of NZ$4.10 and a value added component of 45 cents. Economists were expecting a payout forecast of over NZ$5.00/kg. This forecast was assuming an exchange rate of 59 US cents, Fonterra said. Fonterra also left its forecast for the current dairy season unchanged at NZ$5.20, including a 45 cent value return component made in the final payout at the end of October.

“We were looking at a forecast over NZ$5 when the Kiwi was at 50 (US) cents but the rebound means we’re now working with a dollar that’s 10 cents higher,” Fonterra Chairman Henry van der Heyden said about the 2009/10 forecast.“And, just this week – at a time when we’ve been seeing some tentative signs of recovery in the global dairy market – the US Government has announced export subsidies for their farmers, which is bad news for our farmers,” van der Hayden said.Fonterra also said it had set its fair value share price for 2009/10 at NZ$4.52. This was down NZ$1.05 from the NZ$5.57 price for 2008/2009, and 5 NZcents below the previous forecast in December.

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