Shareholders’ Council in forecast payout increase

MEDIA STATEMENT

7 December 2004

Fonterra Shareholders’ Council welcomes increase in forecast payout and Fair Value Share price

The Fonterra Shareholders’ Council has welcomed Fonterra’s announcement today of a lift in forecast payout and an increase in the estimated Fair Value Share Price.

Fonterra announced a 25 cent lift in the forecast payout for 2004/05 to $4.30 per kilogram of milksolids and a 42 cent increase in its estimated Fair Value Share price to $5.11 for the 2005/06 season.

Shareholders’ Council Chairman John Monaghan said: “It has been a difficult farming season in many parts of the country and there is no doubt that this Christmas bonus will be welcomed by farmers.”

However Mr Monaghan stressed that farmers should have realistic expectations about future seasons’ payout, noting that the 2004/05 forecast increase has been influenced by high commodity prices.

“A sustained high New Zealand dollar will inevitably influence dairying returns. It is part of the business we are in.”

The Shareholders’ Council is responsible for appointing the independent valuer to assess the Fair Value range, from which the Board sets the Fair Value Share price.

Mr Monaghan said: “It is encouraging news that the independent valuer has identified a further increase in the value of Fonterra’s shares.”

ENDS

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