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As a cooperative, Fonterra has a responsibility to its farmers to operate as efficiently as possible across every facet of its business, including vendor pricing and terms, says a spokesman.
"This will drive more cash back to our farmers, in turn helping strengthen rural economies," the written statement to the Dairy News says.
It was commenting on the letter which went out to about 4000 of its suppliers late last year wanting a 10% cut in prices and advising payment would now be 61 days after the end of the month an invoice was received.
"This is just one change we have made as part of a business-wide review and includes changes to our internal processes allowing us to be more responsive with our vendors and reduce our turnaround times with them," the spokesman says.
"We acknowledge that changes in payment terms will have an impact on vendors, and are working with them to help manage any potential impacts.
"The move to a 61 day term is in keeping with Fonterra's global standard term, which is already in place in many of our markets. The process of moving our vendors to our standard term has been underway for the last five years."
OPINION: There is zero chance that someone who joined Fonterra as a lobbyist, then served as a general manager of Fonterra's nutrient management programme, and sat on the board of Export NZ, a division of lobbyist group Business New Zealand, doesn't understand that local butter (and milk and cheese) prices are set by the international commodity price.
Kiwis love their butter, and that's great because New Zealand produces some of the best butter in the world. But when the price of butter goes up, it's tough for some, particularly when many other grocery staples have also gone up and the heat goes on co-operative Fonterra, the country's main butter maker. Here the co-op explains why butter prices are so high right now.
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Applications are now open for the Agri Futures Scholarships, helping young Kiwis from rural backgrounds kickstart careers in agriculture and rural sports.
