Divestment means Fonterra can focus on its strengths
OPINION: Fonterra's board has certainly presented us, as shareholders, with a major issue to consider.
Fonterra's small group of organic farmers are facing a drop in milk price after a record $10.26/kgMS payout last year.
The co-operative's 70 organic suppliers have been told to expect a $9 payout for the 2020-21 season that has just ended.</p.
In an email, Fonterra chief executive Miles Hurrell told farmers that globally, consumer demand for natural, healthy, sustainable products continues to drive growth in organic dairy.
"However, despite the increasing demand, organic milk supply globally remains in surplus and this is negatively impacting global prices," he says.
In addition, Covid-19 continues to impact some Fonterra customers.
Hurrell says while Fonterra can still get products to these customers, the disruption they are experiencing in their supply chains means the co-operative is seeing less demand from them for organic ingredients.
"This is particularly the case for our Australian based customers that export to China.
"As they put their energy into keeping their businesses running, they also have a reduced appetite to drive new product development."
Hurrell says these supply and demand dynamics are flowing through to its opening 2021-22 forecast organic milk price - $8.10 - $9.10/kgMS range, with a midpoint of $8.60/kgMS.
Fonterra's organic payout for 2020-21 has narrowed to $8.90 - $9.10/kgMS with a midpoint of $9/kgMS. It had opened the 2020-21 season with a $8.50-$9/kgMS range.
All of Fonterra's organic ingredients and consumer products are made in the North Island from North Island supply.
Its key sales regions are the US, Australa, South Korea, New Zealand, China & SEA, India, South America, & Taiwan.
Fonterra's organic $10.19/kgMS payout for organic milk last year is a record price for cow milk in New Zealand.
Last month, Fonterra announced an opening forecast farmgate conventional milk price range og $7.25-$8.75/kgMS - a record opening forecast.
Hurrell says that the improving global economic environment and strong demand for dairy, relative to supply, are sitting behind the co-op's $8 midpoint.
Global demand for dairy, especially New Zealand dairy, is continuing to grow. China is leading the charge as its economy continues to recover strongly.
Hurrell says, prompted by Covid-19, people are seeking the health benefits of milk and customers want to secure their supply of New Zealanddairy products and ingredients.
Meat co-operative, Alliance has met with a group of farmer shareholders, who oppose the sale of a controlling stake in the co-op to Irish company Dawn Meats.
Rollovers of quad bikes or ATVs towing calf milk trailers have typically prompted a Safety Alert from Safer Farms, the industry-led organisation dedicated to fostering a safer farming culture across New Zealand.
The Government has announced it has invested $8 million in lower methane dairy genetics research.
A group of Kiwi farmers are urging Alliance farmer-shareholders to vote against a deal that would see the red meat co-operative sell approximately $270 million in shares to Ireland's Dawn Meats.
In a few hundred words it's impossible to adequately describe the outstanding contribution that James Brendan Bolger made to New Zealand since he first entered politics in 1972.
Dawn Meats is set to increase its proposed investment in Alliance Group by up to $25 million following stronger than forecast year-end results by Alliance.
OPINION: Voting is underway for Fonterra’s divestment proposal, with shareholders deciding whether or not sell its consumer brands business.
OPINION: Politicians and Wellington bureaucrats should take a leaf out of the book of Canterbury District Police Commander Superintendent Tony Hill.