It’s been five months since the Co-op expanded its Fixed Milk Price programme, and farmers are adopting the new services on offer.
In addition to being able to secure a fixed price for the current season, Co-op farmers have had three other options for price risk management since June. These include the ability to lock in a Fixed Milk Price for an additional season (i.e. 2026/27) as well as the ability to lock in a Minimum Milk Price or a Milk Price Range for the current season. Fonterra’s Milk Supply Director, Lisa Payne, says it’s still early days, but the results have been encouraging.
“We’ve seen participation in all of the new price risk management services since we introduced them,” Payne says.
“These tools are about giving Co-op farmers more options when it comes to gaining certainty for a portion of their income. Some have told us that this is really important to them for budgeting purposes and generally managing their business.
“We know each farm operation has different needs and a different risk appetite, so we’ve listened to farmers and adapted the Co-op’s offerings to provide the best support we can in what is a volatile market.”
Around 20% of the Co-op’s farms take part in the programme each year. The August application window proved especially popular, with more than 600 farmers applying for one of the price risk management services. This compares to around 200 applications received for each of the June and July events.
Payne says that while the services are optional, even the farmers who choose not to participate will benefit.
“Through launching these services, we can offer more price risk management solutions to Fonterra’s customers that value price certainty for the products they buy from us. These solutions are often a key reason customers choose our Co-op as a supplier over other companies,” she says.
“The premiums we earn from those contracts flow through as improved earnings, which can then be returned to all farmer shareholders as part of their interim or full-year dividend.”
Understanding the Co-op’s price risk management services
Fixed Milk Price is a simple financial tool that farmers can use to gain greater income certainty. It allows farmers to fix the price of up to 50% of their season’s milk supply. Monthly events occur from March to December, so farmers can choose to participate when it suits them and their business.
The new services introduced in June 2025 are:
- The ability to lock in a Fixed Milk Price for an additional season. This allows farmers to secure a fixed price for a portion of their milk for an additional season (i.e. 2026/27), providing greater price certainty over a longer period.
- The ability to lock in a minimum Milk Price for the current season. This enables farmers to secure a minimum price (or ’floor’) for a portion of their milk in the 2025/26 season. If market prices fall below this threshold, they’ll still receive the agreed minimum. If prices rise, they’ll benefit from any upside.
- The ability to lock in a minimum and maximum Milk Price for the current season. This allows farmers to secure a minimum price and a maximum price (or ’cap’) for a portion of their milk in the 2025/26 season. This helps protect farmers against lows while enabling them to move within a range they’re comfortable with.
It’s recommended that farmers seek advice from a financial advisor, accountant, lawyer or other professional before applying for one of these services.