increase font size
Fonterra is going back to being a NZ dairy co-op.
The days of Fonterra chasing more milk around the world are over.
The co-op last week unveiled its new strategy, breaking away from the volume based approach pursued under former chief executive Theo Spierings.
Fonterra says its strategy focuses on using NZ milk to meet market needs. “We will create sustainable value for our customers and farmers through innovation, sustainability and efficiency,” the co-op said.
The new strategy means Fonterra will offload its offshore milk pools over time. In China it has 35,000 cows in three farming hubs. These have performed poorly, gobbling up almost $1 billion without returning any profit to the co-op. Two hubs fully owned by Fonterra are under review.
Chief executive Miles Hurrell says the new strategy “recognises we are a New Zealand co-op, doing amazing things with New Zealand milk to enhance people’s lives and create value for customers and farmers”.
“It’s a strategy that’s rich in innovation, sustainability and efficiency. It unlocks value and sees us focusing on three goals: healthy people, healthy environment and healthy business.”
Hurrell believes this is the right strategy for Fonterra but it requires hard choices.
“We’ve looked at the big opportunities and risks for a New Zealand dairy co-op today. We’ve also got clear on what our strengths are and the hard realities we have to face up to. I’m pleased we now have a strategy built from the belief that our farmers’ milk here in New Zealand is the best and most precious in the world.
“Recognising this, while we will complement our farmer owners’ milk with milk components sourced offshore when required, we will start rationalising our offshore milk pools over time.
“Our strategy will see us focus on world class dairy ingredients for our customers around the world, and innovative ingredients that meet nutrition needs right across people’s life stages. We will focus on ingredient categories: paediatrics, medical and ageing, sports and active, and core dairy.”
Fonterra also plans to create new opportunities in new ways for foodservice, building on foodservice success in China and developing new markets, particularly in Asia Pacific.
This focus on dairy ingredients and foodservice, Hurrell says, will see Fonterra playing to its strengths and driving more value from the parts of business that consistently perform. It will remain in consumer business and will focus on markets throughout Asia Pacific.
“The majority of the products we sell in these markets are made from New Zealand milk and are similar to those we sell in our ingredients business,” said Hurrell.
“This creates efficiencies and helps us play to our strengths.
“It also means we will reduce our consumer product portfolio to those that create superior value.”
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.
An A$2 billion bid for Fonterra's Oceania business would be great news, according to Forsyth Barr senior analyst, equities, Matt Montgomerie.
The world's largest dairy company may be in pole position to acquire Fonterra's Australian assets.
Over 85% of Fonterra farmer suppliers will be eligible for customer funding up to $1,500 for solutions designed to drive on-farm efficiency gains and reduce emissions intensity.
One of New Zealand’s largest fertiliser plants could be forced to shut down for four months as uncertainty looms over gas supply.
Federated Farmers North Canterbury president Bex Green says two public meetings held this week should have made it loud and clear that rural families and businesses are concerned about proposed staffing changes at NZ Police.
The Environmental Protection Authority (EPA) is consulting on a proposal to ban weedkillers containing chlorthal-dimethyl (DCPA).
August 6 marks Farm Worker Appreciation Day, a moment to recognise the dedication and hard mahi of dairy farm workers across Aotearoa - and DairyNZ is taking the opportunity to celebrate the skilled teams working on its two research farms.
OPINION: The Government has been seeking industry feedback on its proposed amendments to a range of Resource Management Act (RMA) national direction instruments.
A Taupo company says it's the first to bring CO₂-powered water heating technology to New Zealand dairy sheds, helping farmers cut energy costs by up to 85%.
OPINION: Sydney has a $12 million milk disposal problem.
OPINION: Canterbury milk processor Synlait's recovery seems to have hit another snag.
