New Zealand dairy giant Fonterra is considering reducing its forecast 2003 season payment to suppliers.

According to a report in the Dominion Post, the strength of the New Zealand dollar has made it likely that Fonterra will cut payments to its 14,000 farmer-shareholders below the forecast NZ$3.70 (US$2.04) per kilogram of milk solids.

“We understand there is some pressure on the NZ$3.70 forecast and that they have made a mess of the foreign-exchange cover,” an industry-watcher told the newspaper.