What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
Fonterra chairman, John Monaghan says that while the Government has recommended tweaks to the rules under which Fonterra has to give its farmers’ milk, effectively at cost price to foreign-backed competitors, the playing field is still tipped against New Zealand dairy farmers.
“Our farmer-owned cooperative wants an industry that promotes investment across regional New Zealand and where profits are kept in New Zealand. We stand for an industry where New Zealand farmers are paid well for their milk and the unique attributes of our environment are protected and enhanced.
“Given the significant increase in competition within the New Zealand dairy industry, we’re disappointed the Government did not recommend removing the requirement for us to supply our farmers’ milk to large, export-focused businesses altogether.”
Fonterra welcomed the Government’s decision to give the co-op to refuse milk from a farm unlikely to comply with its terms of supply, or where the farm is a new conversion.
Monaghan says these changes will support the co-op’s ability to meet customers’ demands and continue leading the industry toward a sustainable future for farmers and the rural communities.
Fonterra supports greater pricing transparency across the industry and notes with interest the Government’s decision that the Minister of Agriculture will be able to nominate one person to sit on Fonterra’s Milk Price Panel.
Fonterra encourages the Government to extend this transparency and require all processors to publish the average price they pay to farmers, the key parameters of their milk price and examples showing the payout that would be received for different parameters.
“All efforts to bring greater pricing transparency into the dairy industry should be encouraged. There’s no downside in farmers having clear, consistent information from which to compare processors,” says Monaghan.
“We look forward to constructively participating in the upcoming legislative process and will continue to push for an outcome that is in the interests of all dairy farmers and New Zealand.”
