Shareholders' Council welcomes payout announcement

30 May 2008

Fonterra Shareholders' Council welcomes payout announcement

The Fonterra Shareholders' Council welcomed Fonterra's announcement today of an increase in the 2007/08 forecast payout to $7.90 per kilogram of milksolids and a record opening forecast of $7.00 for the 2008/09 season.

Shareholders' Council Chairman Blue Read said: "The lift in this season's forecast payout is good news for Fonterra farmers and a forecast of $7.00 is a great start for the year ahead. It hasn't been the easiest season for many farmers with rising costs and widespread drought so this will have a positive impact on our farming businesses."

Mr Read said the Board's decision to consider retaining some earnings this season to mitigate the impact of redemptions was sensible.

Some fall in the Fair Value Share was not unexpected and would bring some new challenges for the business, Mr Read said.

"Part of the change reflects what has happened in world economies since the last valuation. Fonterra is a truly global business and changes in the external environment impact the co-operative daily. We have benefited hugely from record global commodity prices and this is the other side of the coin.

"The Fair Value Share is an indication of expected performance over time. The Council has reviewed Fonterra's Three-Year Business Plan and strategy and we are confident that there is a clear and cohesive direction for the business.

"All the same, the fall in the share price reinforces the need to build long-term, sustainable value and that will require agreement on the future direction of our co-operative."

ENDS

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