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 director and farmer-shareholder John Monaghan, who was in Colombo representing Fonterra at the Commonwealth Business Forum earlier this week, says the agreement will help formalise and support further public and private sector dairy sector cooperation between the two countries.
"The New Zealand dairy industry and Fonterra have a long history working with the Sri Lankan dairy industry," he says. "Fonterra has been collecting milk for the last 16 years to support the development of fresh dairy products.
"Today's agreement signals a clear pathway for the New Zealand Government and Fonterra to significantly increase New Zealand's investment in dairy development in Sri Lanka over the next decade."
Monaghan says as Fonterra expands its business in Sri Lanka the cooperative is looking at ways it can significantly increase local milk collection to build on its commitment to the local dairy industry.
"Within the framework of this agreement, Fonterra is looking to invest in model farms to both train local farmers as well as provide a sustainable milk source for Fonterra's fresh dairy business; invest in more milk collection centres around the country to enhance quality milk collection and build on the Farmer Education and Development programme to ensure more farmers are producing larger volumes of high quality milk."
Fonterra began collecting milk from Sri Lankan dairy farmers in 1997 to support the development of a yoghurt business in Sri Lanka under the Anchor Newdale brand. In the same year the cooperative launched a farmer development programme designed to help farmers up skill in the areas of milk quality, production and sustainability.
During the course of the three year programme, participants learn a range of new skills including how to detect and treat the early stages of mastitis; implement best practice farm health and safety practices and understand more about on-farm milk quality improvement techniques.
Leon Clement, managing director for Fonterra Brands Lanka says by working with local farmers to improve the quality of their milk, Fonterra has managed to grow local milk collection to 30,000 litres of locally produced fresh milk, every day.
"Fonterra is built on more than 200 years of dairying tradition and we want to use our knowledge and expertise to help develop Sri Lankan dairy capabilities to create better and more prosperous farms, and communities," he says.
"By investing in local farmer education and development, as well as training local employees at our own milk collection centres, we have already significantly enhanced the quality of the milk collected over the last decade.
"Under the Dairy Cooperation Agreement, Fonterra will look to build on this further, continuing to focus on both milk production and milk quality."
