Latest Advance Rates

The Advance Rate is the percentage of the forecast Farmgate Milk Price paid on actual milk volumes collected each month.
 

View the latest Advance Rates Schedule:
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THE ADVANCE RATE

What does the Advance Rate do?

The Advance Rate is the percentage of the forecast Farmgate Milk Price paid on actual milk volumes collected each month. The Advance Rate is based on the current forecast for the full year, and by only paying a percentage of the current forecast throughout the year, we reduce the risk that future advance payments will need to be decreased, or in extreme cases, returned to Fonterra if they were overpaid (based on a higher previous forecast).

It’s important to remember that the Advance Rate does not mean Fonterra is holding onto unpaid milk payments for free, as there is a charge in the Milk Price Manual calculation to compensate for this.

INFORMATION

Further information

The structure we put around the Advance Rate is a balance of getting farmers as much of their milk payment as early as possible, while also giving consideration to things like maintaining a healthy balance sheet for the Co-op. We need to have the necessary cashflow to operate day-to-day, meet our obligations to our banks and lenders, and pay our bills. If we did not have the Advance Rate, our Co-op would require more equity.

Maintaining a healthy balance sheet also helps our Co-op keep a strong credit rating which gives us access to a wider pool of lenders and lower interest rates. Our Co-op’s credit rating also influences the willingness of banks to lend to farmers and enables us to support farmers as we did in 2014 with the Co-op Support Loan.

Paying progressively over the season and finalising the Farmgate Milk Price after the end of the season is an important part of our capital and funding structure. Retaining part of the forecast milk payment until the end of the season provides capacity for the Board to adjust the Farmgate Milk Price if it determines it needs to do so to support the financial strength of our Co-operative.  The Farmgate Milk Price is finalised in September after the end of the season.  

In August 2024 we announced changes that were designed to get cash to farmers sooner, made possible because of the Co-op’s strong balance sheet. These adjustments, which apply until to the end of the 2024/25 season, included an increase in the December paid January payment from 75% to 85%.

In May 2023 we announced a change to the Advance Rate schedule that saw an increase in the opening Advance Rate for the FY24 season from 65% to 75%.

Meanwhile back in 2020, we implemented three improvements to the Advance Rate. This included bringing forward the monthly payment date, bringing forward the final settlement payments and making the Advance Rate Board Guidelines simpler.

We’re making adjustments to the FY25 Advance Rate payment schedule, including an increase in the December paid January payment from 75% to 85%.

Payment Month Advance Rate Percentage Rate (Guidance)
July 75%
August 75%
September 76%
October 78%
November 80%
December 82%
January 85%
February 85%
March 85%
April 85%
May 85%
June 85%
July 85%
August 92.5%
September 97.5%
5 Working Days after Annual Results 100%

For more information here on organic supply and other speciality milk programmes.