Southland's dairy farmers will bank a final milk price of $9.69 a kilogram of milksolids for last season, with Fonterra's full-year results confirming a record cash return to farmers and a firmer forecast for the season now under way.

The co-operative reported on 24 September a final 2025/26 farmgate milk price of $9.69/kgMS, down from $10.16 the previous year, alongside a full-year dividend of 73 cents a share. That compares with 57 cents a year earlier and includes a 33-cent final dividend, a 24-cent interim dividend and a 16-cent special dividend paid in April from the sale of the Mainland consumer business.

In total, Fonterra said it returned about $19.6 billion in cash to farmer owners and unit holders during the year, on revenue of $27 billion.

For the 2026/27 season, the forecast milk price sits at a midpoint of $9.50/kgMS, in a range of $8.50 to $10.50. The co-operative opened the season in May at $9.75, cut the midpoint to $9.25 in July after an 11 per cent fall in Global Dairy Trade prices, then lifted it to $9.50 on 21 September as powder prices improved.

Chief executive Richard Allen described the year as "a year of delivery", citing near-record milk collection and shipping volumes despite weather events and geopolitical volatility.

Profit lifted by Mainland sale

Total group profit after tax was $2.6 billion, up 142 per cent, but that figure includes a $1.2 billion one-off benefit from the Mainland divestment. Setting the sale aside, underlying operating profit from the continuing business-to-business operation rose 23.6 per cent to $1.8 billion, and underlying profit after tax was $1.2 billion, or 71 cents a share. Return on capital climbed to 14.2 per cent, above the co-operative's 10 to 12 per cent target range.

Fonterra is guiding to underlying earnings of 65 to 85 cents a share this year and expects to collect just above 1.6 billion kilograms of milksolids. The organic milk price for 2025/26 was a record $14.13/kgMS, with a forecast of $14.30 for the new season, and the co-operative has signalled plans to expand organic supply into the South Island.

South Island spending

The results also confirmed a $1 billion investment programme in the South Island over three years, funded from the Mainland proceeds and cash flow and aimed at expanding protein manufacturing while reducing water use and emissions. The new capacity is expected to be operational in 2029 and to create 50 to 60 permanent roles. Fonterra expects total capital spending of roughly $1.3 billion to $1.6 billion a year over the next three years.

Edendale, Fonterra's biggest Southland site, is already in the middle of its own expansion: a $150 million UHT cream plant under construction that the co-operative has said will create about 70 jobs.

Chairman Peter McBride credited the co-operative's consistency through a year of major change, including the Mainland sale and Mr Allen's move into the chief executive role.

For suppliers in the south, the numbers point to a second season in a row with a milk price above $9, even as the co-operative warns that a thin forward sales book leaves it exposed to swings in commodity prices.