Boost to rural NZ as Fonterra lifts farmgate milk price forecast, and plans special Mainland dividend
Friday, 20 February 2026
Farmer-owned dairy cooperative Fonterra has lifted its forecast Farmgate Milk Price for the 2025/26 season.
In an announcement on Friday, Fonterra said it had increased the midpoint for the Farmgate Milk Price from $9 per kilo of milk solids to $9.50, with the forecast range lifting and narrowing from $8.50 to $9.50 to $9.20 to $9.80.
Improvements in global commodity prices were behind the move, said chief executive Miles Hurrell, though he also cited strong sales.
The announcement comes the day after Fonterra’s shareholders approved a $2 per share capital return from the sale of its Mainland consumer brands business by a landslide 98.85% of votes cast at a virtual special meeting.
The capital return, which is expected to see many dairy farmers reduce debt, remains subject to the Mainland sale completing, which the cooperative expected to happen in the first quarter of the 2026 calendar year.
“Global dairy prices have been volatile across the season,” Hurrell said. “Following the declines at the end of 2025, prices have lifted in the last four Global Dairy Trade events.”
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That was despite global milk production remaining above seasonal norms.
That brought the risk of further volatility in pricing, he said.
Hurrell also updated Fonterra’s farmer-shareholders on Mainland Group earnings, saying it intended to pay out 100% of underlying earnings generated by Mainland Group during FY26 while it remained under Fonterra ownership.
Mainland is Fonterra’s consumer brands arm, which it has sold to European dairy giant Lactalis.
The earnings will be distributed through a special Mainland dividend payment to shareholders and unit holders following the completion of the sale to Lactalis, Hurrell said.
“We are currently finalising our interim accounts and can indicate that we expect the special Mainland dividend to be in the range of 14 to 18 cents per share, which reflects the operating performance of the Mainland business during the first half of this year driven by ongoing cost management and favourable input commodity prices,” he said.
“This remains subject to the settlement date of the transaction and the finalisation of our financial statements and audit process,” he said.
“Fonterra’s FY26 forecast earnings guidance from continuing operations remains unchanged at 45 to 65 cents per share,” he said.
“Our interim dividend from continuing operations will be confirmed when we release our FY26 interim results and an update on the special Mainland dividend will be given at this time,” Hurrell said.