Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
It has also upgraded its forecast closing range by 10 cents/kgMS to A$5.40 to A$5.80kgMS.
When coupled with Fonterra’s A40 cents/kgMS additional payment, it means Fonterra farmers can expect to receive A$5.70kgMS, with a forecast closing price range of A$5.80 to A$6.20kgMS.
Fonterra Australia managing director René Dedoncker says it has taken a responsible view in setting its opening price and forecast closing range, which reflects Fonterra’s Australian improved product mix and the current commodities market.
“This is a responsible price in the current market. World dairy prices have strengthened, reflecting the strong fundamentals supporting global dairy markets,” says Dedoncker.
“We’ve made significant investments in Australia and achieved a number of milestones for our business, including our multi-million dollar cheese plant at Stanhope, expanded capacity at our Cobden and Wynyard plants, and commencing our joint venture with Beingmate at Darnum.
“This has helped to rebalance our product mix, underpinning the price we can pay to our farmers.
“To support our Stanhope investment and ensure we fully optimise the new plant, we need to grow our milk pool, and we believe that, when combined with our additional 40c/kgMS payment, our opening price will enable farmers to plan ahead and position their businesses to grow if they choose.” Fonterra Australia’s opening price and forecast closing price range also reflects its commitment to provide clear and timely price advice to its farmers.
Four weeks ago Fonterra announced our forecast closing range, six weeks out from the beginning of the season, to give farmers an early indication of our price so that they could plan ahead.
“Our opening price and forecast closing range are a demonstration of our new way of working, with close engagement with the Bonlac Supply Company to ensure we have input from our farmers.”
Individual suppliers’ milk prices will vary across Fonterra’s supply regions, depending on the individual farm’s milk profile, regional production factors, milk quality and farm management systems.
