Fonterra boss Rene Dedoncker has confirmed a 70 cent premium that is being paid to some suppliers of the company's Stanhope factory in a bid to hold supply and meet contracts as farmers battle high water and feed prices.
Mr Dedoncker said the company asked Stanhope suppliers before implementing the scheme and was hoping it would enable Fonterra to maintain production at the recently upgraded facility.
Fonterra announced an increase in the farm gate milk price last Monday, bringing Fonterra's average farm gate milk price to $6.05kg/MS. With the premium, Stanhope suppliers would be receiving an average farm gate milk price to $6.75kg/MS.
Fonterra has upgraded the Stanhope factory twice in recent years with the most recent $125 million expansion seeing the capacity of the factory almost double, with more than 80 000 metric tonnes of cheese to be produced by the plant each year.
See next week's Country News for more.