Friday, 09 November 2018 10:20

Competitive milk price ‘doesn’t just happen’

Written by 
“A competitive milk price doesn’t just happen,” says Fonterra chairman John Monaghan. “A competitive milk price doesn’t just happen,” says Fonterra chairman John Monaghan.

Fonterra chairman John Monaghan says a lot of work goes into delivering a globally competitive milk price to farmers.

“A competitive milk price doesn’t just happen,” he told the Fonterra annual meeting in Lichfield yesterday.

He reminded the 400 shareholders at the meeting that last year’s farmgate milk price was $6.69/kgMS, third highest in a decade.

Sales outside the Global Dairy Trade (GDT) platform added 10c/kgMS to the payout last year; GDT sales account for 42% of milk price auction.

The combination of these sales and Fonterra’s ability to keep milk price costs below the rate of inflation, equates to an additional $750 million paid to farmers every year in higher milk prices, says Monaghan.

Monaghan pointed out that there had been a “structural change” in local milk prices since Fonterra was formed.

“We’ve gone from being paid about half as much as our global peers to the point now where we are consistently paid the same or thereabouts.

“It sounds arrogant to say it, but the fact is that simply never would have happened without a strong Fonterra.

“For a time this year, NZ farmers were paid the highest milk price in the world.”

A higher milk price poses a challenge to Fonterra’s ingredients and consumer and foodservice businesses; they were competing on price against US and European dairy giants that had lower input costs.

 
 

More like this

Light reading

In a follow-up to this old mutt’s piece two issues ago about Fonterra directors getting to grips with the co-op’s financial state and loudly sharing their dismay in the Koru club, another of the Hound’s spies has passed on more news in the ‘Fonterra director watch’ category.

 
 

» Latest Print Issues Online

Milking It

Toxic loan?

More questions are being asked about the Government’s contentious $10 million loan to Westland.

Moo love on the net

Cows and bulls searching for ‘moo love’ now have a mobile app to help their breeders.

 
 

» Connect with Dairy News