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 has asked the Federal Government for more help for farmers making a transition to low-carbon technologies.
"The reality is dairy farmers engage in energy-intensive processing, so they should be eligible for funding to help them adapt," Doumani last month told a meeting at the Rural Press Club of Victoria.
"We've been talking to the Government about the special needs of dairy farming and so far they're receptive. The biggest likely impact of carbon pricing for dairy farmers will be electricity price increases.
"We expect the Government's carbon pricing will have a direct impact of about $3000/dairy farm/year in increased electricity costs."
Fonterra will help its suppliers identify ways to reduce electricity use on-farm in preparation for the carbon tax, Doumani says.
"We accept a low-carbon future is inevitable and a challenge we have to face. It's also an opportunity to innovate, invest and drive for a more competitive future. We have [made plans] to reduce carbon emissions in our manufacturing operations, and now we're turning our attention to how we can help our farmer suppliers."
Fonterra has published a farmers' guide to managing the electricity cost increases of carbon pricing. It covers key areas of farm electricity use and helps farmers assess their operations. It's a start, Doumani says. The co-op has been talking to its Australian suppliers about sustainability.
"They tell us they want to operate a sustainable business and reduce carbon emissions, especially in light of the [extra costs] associated with the carbon pricing. But they don't know how to do it or fund it.
"They want independent advice from someone who understands dairying to tell them what technologies to employ.
"Farmers are wary of 'snake-oil' salesmen knocking on their doors offering dubious solutions. They're concerned about unproven technologies and capital costs."
The guide includes a calculator to help farmers consider their likely electricity bill increases and a self-assessment tool to help them understand how their operation rates against best practice electricity usage.
Fonterra will also run information sessions for farmers and provide expertise to help with on-farm assessments.
