In a statement released on Friday, Fonterra chief executive Miles Hurrell said
Fonterra had lifted its 2020-21 forecast farm-gate milk price range of $7.30 to $7.90 per kilogram of milk solids (kgMS), up from $6.90 to $7.50 per kgMS.
JJ Ltd managing director Paul Jones, of Invercargill, said JJ Ltd sold tractors and farm machinery from six dealerships between Christchurch and Invercargill and was closely aligned to the dairy industry.
The machinery business was one of the first to feel a "ripple effect" of changes to the farm-gate milk price.
The price rise had increased "confidence" in the industry, which was "buoyant" and farmers were spending.
"It’s excellent — it’s what we want, it’s what everyone wants and what the country needs."
Mr Hurrell said consistent strong demand for New Zealand dairy had resulted in the price lift, he said.
GlobalDairyTrade (GDT) prices had continued to increase since February last year including a 15% increase last week.
Demand for dairy was good across Southeast Asia and the Middle East and strong in China.
“China’s local milk supply is being used in fresh dairy products and they are looking to us to provide longer-life dairy products — in particular, whole milk powder, which has a big influence on the forecast farm-gate milk price.
The lift in the co-op’s forecast farm-gate milk price was good news for New Zealand farmers and the wellbeing of rural communities, he said.
As a result, the co-op would contribute more than $11.5billion to the New Zealand economy through milk price payments this year.
The midpoint of the range, which farmers were paid off, had increased to $7.60 per kgMS.
Fonterra had maintained its plus or minus 30c range on its forecast farm-gate milk price, reflecting the continued uncertainties in the global dairy market.
"It is important that farmers recognise there are a number of downside risks to the mid-point of the range.
"For example, the EU and US are heading into their season and their milk supply will start increasing, the impacts of Covid-19 on key markets and market volatility."
Global price changes
Whole milk powder — up 21.0%.
Butter — up 13.7%.
Anhydrous milk fat — up 7.4%.
Lactose — up 4.9%.
Skim milk powder — up 3.5%.
Cheddar — up 1.3%.
Butter milk powder — down 0.3%.
