Fonterra Co-operative Group said on Friday that it has raised its farmgate milk price forecast for the 2025/2026 season, reflecting stronger commodity markets and a robust sales book. The new annual range for the price the co-operative will pay farmers is NZ$9.20-NZ$9.80 per kilogram of milk solids (kgMS), up from the previously signalled NZ$8.50-NZ$9.50 per kgMS.
The company attributed the upward revision to improving conditions in global commodity markets and momentum in sales. Miles Hurrell, Fonterra's chief executive officer, pointed to recent auction results as evidence of that improvement.
"Following the declines at the end of 2025, prices have lifted in the last four Global Dairy Trade events," Hurrell said.
In addition to the higher farmgate price range, Fonterra outlined plans to return value to shareholders through a special dividend. The co-operative said the special distribution will be sourced from the whole of Mainland Group's underlying earnings for fiscal 2026. Mainland Group formed part of a transaction agreed last year valued at NZ$4.22 billion.
Fonterra had earlier agreed to sell its global consumer and associated businesses to Lactalis. The company expects the special dividend to fall between 14 and 18 New Zealand cents per share, with the payout slated to follow completion of the sale to Lactalis in the first quarter of 2026.
While announcing the dividend intent and the adjusted farmgate price outlook, Fonterra left its earnings guidance from continuing operations for fiscal 2026 unchanged at 45-65 New Zealand cents per share. The company reiterated exchange information used in reporting - $1 = 1.6753 New Zealand dollars.
These updates combine operational pricing signals for farmers with a capital return plan tied to the timing and completion of a major divestment. The firm highlighted both improved short-term market conditions that support a higher milk price and a one-off shareholder return mechanism built on Mainland Group earnings that will crystallise once the Lactalis transaction is finalised.