High milk prices bite Fonterra's profit
Soaring whole milk powder (WMP) prices are lifting forecast milk price to Fonterra farmer suppliers but it is also affecting the co-op’s profitability.
As predicted by Dairy News, the cooperative’s 60 organic suppliers last season have set a record price for cow milk in New Zealand at $10.19/kgMS.
Fonterra’s global business manager organics Andrew Henderson told Dairy News that the final price was driven by a combination of factors including organic protein sales in the US, a favourable exchange rate and a number of efficiency improvements right across the supply chain.
“This is a fantastic result for organic dairy in New Zealand, it sets a new benchmark for the value of our premium New Zealand grass-fed dairy products,” says Henderson.
“It’s something we can all be proud of because, ultimately, the result is a culmination of work put in by a wide group of people.
“It starts with the effort of our organic suppliers to meet and exceed organic certification standards. Then it’s the endeavours of our transport, manufacturing, sales and marketing teams who all help make the most of that milk to drive returns and deliver value to the co-op.”
The list of organic milk suppliers is growing.
This season Fonterra will collect organic milk from 74 suppliers and about 25 additional farms are in the process of becoming organic farms, a transition that takes three years.
The co-op has set a 2020/21 forecast range $8.50 - $9.00/kgMS for this season.
Fonterra’s organic suppliers are based throughout the North Island, with most of the milk processed in Waikato.
The Waitoa plant makes organic milk powders and UHT milk, the Morrinsville plant butter and milk powders, while Hautapu produces cheese, whey protein concentrates and milk protein concentrates. Anchor organic milk is generated at Palmerton North.
