The Co-op’s Fixed Milk Price programme is off to a good start this year, and further enhancements are coming in June to give Co-op farmers more options to manage Milk Price volatility.
Hundreds of farmers have submitted applications in the first two Fixed Milk Price Events, held in March and April, which Fonterra Milk Supply Director Lisa Payne says help to show the ongoing farmer demand for Price Risk Management services.
“Fixed Milk Price is an accessible and easy-to-use service that’s there as an option for farmers who want greater certainty for a portion of their revenue,” Lisa Payne says.
“It’s been great to see participation grow since we introduced the tool in 2019. Last year, we made changes to better meet farmer demand and ended up allocating a record 120 million kgMS. We’re also pleased to confirm that we’ll be further enhancing our Price Risk Management services from June this year.
“Three new services will be introduced to complement the current Fixed Milk Price programme, aimed at giving Fonterra farmers more choice when managing the risk of a moving Milk Price. This includes the ability to lock in a Fixed Milk Price for an additional season as well as the ability to lock in a minimum Milk Price – or a minimum and maximum Milk Price – for the current season.
“Expanding our price risk management services also benefits the whole Co-operative. When we can lock in set prices for a portion of our milk supply, we can offer price risk management solutions to key customers that value price certainty for the products they buy from us. These solutions are often a key reason customers choose Fonterra as a supplier over other companies, and the premiums earned flow through as improved earnings,” Lisa says.
“We’ve been testing the new services with our farmers to ensure the best possible user experience, and we expect to be able to share more details soon. Farmers will see the services available alongside the Fixed Milk Price Event in June.”
The remaining Fixed Milk Price Events of the year are as follows:
May: 12-13 May 2025
June: 9-10 June 2025
July: 7-8 July 2025
August: 11-12 August 2025
September: 8-9 September 2025
October: 13-14 October 2025
November: 10-11 November 2025
December: 8-9 December 2025
What are the new services coming in June?
- The ability to lock in a Fixed Milk Price for an additional season. This will enable farmers to secure a fixed price for a portion of their milk for two seasons, providing greater price certainty over a longer period.
- The ability to lock in a minimum Milk Price for the current season. This will enable farmers to secure a minimum price (or ‘floor’) for a portion of their milk. It’s designed to protect farmers from any decrease below the set minimum while ensuring they benefit from any increases to the forecast Farmgate Milk Price.
- The ability to lock in a minimum and maximum Milk Price for the current season. This will enable farmers to secure both a minimum price and a maximum price (or 'cap') for a portion of their milk, helping them to stabilise their income within a range that they’re comfortable with.
How much milk supply can farmers apply for?
- Farmers can use any combination of our Fixed Milk Price offer and the new services for up to 50% of their total estimated production for the 2025/26 season.
- We won’t be changing the maximum total volume available through our Price Risk Management services – it will remain at 150 million kgMS, or around 10% of the Co-op's total New Zealand milk collections.
Why are the new services being introduced?
This is about giving farmers more support and flexibility while helping us build a stronger Co-op.
Benefits for our farmers:
- Using price risk management services can provide farmers with more certainty for budgeting and managing their business.
- Participation in our existing Fixed Milk Price programme has been growing – including a record allocation of 120 million kgMS last season.
- As demand has grown, weʼve received feedback from farmers wanting more options to manage Milk Price volatility according to their needs.
- We’re responding to that demand and testing the new services through farmer focus groups to ensure the best possible user experience.
Benefits for the Co-op:
- When we lock in set prices for a portion of the Co-op’s milk supply, we can offer Price Risk Management solutions for key customers that value price certainty for the products they buy from us.
- These solutions are often a key reason customers choose Fonterra as a supplier over other companies.
- We can lock in longer term contracts that attract additional premiums, which results in a benefit for all shareholders because this shows up as improved earnings.
If you have any questions, please get in touch with your local Co-operative Services Area Manager or the Farmer Support Team.
More information is also available at nzfarmsource.co.nz/fmp