$1b windfall for shareholders
Fonterra's plan to return $1 billion to shareholders in three years through the divestments of overseas milk pools is the right move, according to Waikato farmer Andrew McGiven.
Attemption to 'fix' things, successive Sri Lankan governments have tried to boost local milk production and raise tariffs to stem the US$370 million spent annualy on milk powders.
The law of unintended consequences prevailed and Sri Lanka now has a milk powder shortage. So Fonterra may have the last laugh. Sri Lankan Finance Minister Basil Rajapaksa is looking at reducing the taxes imposed on imported powdered milk to arrest the shortage currently prevailing in market. This could mean more Fonterra milk powder heading to Sri Lanka.
The island nation's milk production is still only around 40% of the total requirement meaning it has to import 60% of its requirements.
