Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
On the co-ops performance, English says during a downturn there is always a temptation to blame; however that's a product of world supply.
"You can't expect Fonterra to be setting the world price."
He is confident that whatever Fonterra is discussing with its shareholders it is helping farmers maintain a cohesive and confident view of the future.
Fonterra is expecting milk production to be lower by 4% this season. English says this allows the co-op to focus on its volume-to-value strategy. More milk is going into higher value products.
Shareholders and the Government would like to think more could have happened sooner, English says.
"But Fonterra has had to deal with this big surge in production over recent years so they are now well geared up with the right attitude to push more volume into high value added products.
"In five years that's how farmers will judge them: on how the co-op has succeeded in turning more milk into high value products."
However, English notes that higher value added products would always be risky investments; Fonterra's product range will always be underpinned by a base load of competitive production of milk powder commodity type products.
