Fonterra, a leading dairy cooperative in New Zealand, is set to expand its Fixed Milk Price (FMP) service, providing farmers with enhanced income security amid market fluctuations. The new features include fixing milk prices across two seasons, a minimum price lock-in, and a price range option. These measures aim to help farmers manage pricing volatility while strengthening Fonterra’s risk management strategy.
Fonterra, one of New Zealand’s largest dairy cooperatives, has announced a significant expansion of its Fixed Milk Price (FMP) service. This initiative is designed to help dairy farmers manage income risks amid fluctuating market conditions, offering greater financial stability and pricing flexibility.
The FMP service, first introduced in 2019, allows farmers to secure a fixed price for their milk, shielding them from unpredictable price swings. The latest expansion includes three key features: an option to lock in prices for two seasons, a minimum or floor price guarantee, and a price range option for the current season, which sets both minimum and maximum price limits. These additions aim to provide farmers with more control over their earnings and reduce exposure to market volatility.
Increasing Farmer Participation and Demand
Lisa Payne, Fonterra’s Director of Milk Supply, emphasized the increasing popularity of the FMP service. “Farmers have been actively using this tool to manage their income. In the 2024-25 season alone, over 120 million kg of milksolids were locked in at fixed prices,” she stated.
At the first event for the 2025-26 season, 300 farmers secured 15 million kg of milksolids from a total offering of 20 million kg. Fonterra had previously doubled its total fixed price offerings for the 2025 season to 150 million kg, which now represents 10% of the cooperative’s total milk supply.
Payne highlighted that expanding Fonterra’s price risk management services benefits both farmers and the cooperative. “By locking in prices, we can provide better price risk management solutions to our key customers, strengthening our overall earnings,” she added.
How the FMP Service Works
Fonterra hosts 10 Fixed Milk Price events each supply season, starting in March. Prices are based on the average SGX-NZX milk price futures contracts, ensuring competitive rates. Farmers can participate in these events as per their convenience, securing prices for up to 50% of their seasonal milk production.
A major addition is the new minimum price option, which aligns with the recently launched Figured/StoneX Put Option product. This feature enables farmers to set a floor price while still benefiting from potential market upswings.
A Secure Future for New Zealand Dairy Farmers
Fonterra’s latest expansion of the FMP service marks a significant step in providing economic security for dairy farmers across New Zealand. As the dairy industry continues to face global market uncertainties, these pricing tools will play a crucial role in stabilizing farmer incomes and ensuring long-term sustainability.
With these strategic enhancements, Fonterra is reinforcing its commitment to supporting New Zealand’s dairy sector, allowing farmers to focus on productivity without the added stress of price fluctuations.
