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.
After years of farmer lobbying, the processer offered a ‘cap and collar’ option, which will put a floor and a ceiling on the farmgate milk price for three years.
About 20 farmers from Wagga Wagga and Finley districts supply the factory that produces Riverina Fresh products for the east coast market.
Euberta farmers Neil and Simone Jolliffe say they’ve sought this certainty since buying their farm seven years ago.
“When we bought the farm we were on A56 cents/L and the following year we dropped to A36c,” Jolliffe says.
“It’s come at a good time for us. We’re looking to grow the business but we didn’t want to grow it and take a big hit like we did in 2009. Now we’ve got an assurance that for the next three years this will be our price.”
Neil Jolliffe estimates this will mean his milk cheque will only fluctuate by about 4 cents/L over the next three years.
