Tuesday, 23 November 2021 08:55

Doing nothing not an option

Written by  Sudesh Kissun
Fonterra chairman Peter McBride. Fonterra chairman Peter McBride.

Doing nothing to arrest the slide in milk supply is not an option, says Fonterra chairman Peter McBride.

He told farmer shareholders that the total New Zealand milk supply is likely to decline or be flat at best.

McBride says Fonterra's supply depends on the actions it takes with the capital structure, performance, productivity and sustainability.

"If we do nothing, we are likely to see around a 12-20% decline by 2030 based on the milk supply scenarios we have modelled.

"Protecting a strong New Zealand farmer-owned co-operative of scale is in all our interests."

He notes that being a strong co-op ensures it pays the highest sustainable milk price. Fonterra's milk price sets the benchmark for prices Kiwi dairy farmers are paid for their milk.

"Based on our current operations, our farmgate milk price could be 6-13 cents lower by 2030 if we make no changes to our capital structure."

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