Fonterra launches $1500 on-farm funding for eligible farmers
Over 85% of Fonterra farmer suppliers will be eligible for customer funding up to $1,500 for solutions designed to drive on-farm efficiency gains and reduce emissions intensity.
Lactalis cleared a major hurdle this month when the Australian Competition and Consumer Commission (ACCC) indicated that it would not oppose Lactalis' proposed acquisition of Fonterra's consumer, dairy ingredients and food service businesses.
Another Australian dairy processor, Bega Cheese, has also applied for clearance from ACCC to buy Fonterra businesses, being put on sale as part of a divestment of the co-op's consumer business. Latest media reports from Australia says Bega has formed a consortium with Dutch multinational dairy cooperative FrieslandCampina to bid for Fonterra assets. The third player making a bid is Japanese food company Meiji Holdings.
However, the green light from the ACCC puts Lactalis Australia at the front of the queue.
Lactalis and Fonterra both currently acquire raw milk from dairy farmers in Victoria and Tasmania, as well as processing and supplying a range of dairy products across Australia. The ACCC decision means there are no regulatory hurdles for the acquisition.
"We looked very closely at the transaction as it will combine two of the largest buyers of raw milk in Victoria and lead to some further consolidation in Tasmania," ACCC deputy chair Mick Keogh says.
"While we acknowledge the concerns raised by some representative bodies after careful consideration we have determined that the acquisition is unlikely to result in a substantial lessening of competition."
The ACCC found that across Gippsland, the Murray and Western Victoria, alternative buyers of raw milk would continue to constrain Lactalis if the acquisition proceeded.
"We found that while the industry in Tasmania is already concentrated, Lactalis has a limited presence and the acquisition would not substantially alter the market dynamics. If the acquisition proceeded, Lactalis would continue to be constrained by Saputo and, to a lesser extent, Mondelez," Keogh says.
"Because Fonterra and Lactalis have differing end product mixes, they often seek to acquire milk from farmers with different production profiles. Accordingly, we found that they are not likely to be each other's closest competitors. This was reflected by analysis which showed very few farmers switched between the two processors."
The ACCC also concluded that the transaction was unlikely to substantially lessen competition in the wholesale supply of dairy products such as drinking milk, cream, cheese, chilled yellow spreads and dairy ingredients like milk powder.
Fonterra's portfolio in Australia includes the country's top butter brand, Western Star and popular cheese brands - Perfect Italiano, Bega Cheese, and Mainland. Lactalis Australia has Paul brands of fresh milk, yoghurt and cream plus several top selling brands of flavoured milk and cheese.
The differing production focus of Fonterra and Lactalis meant that there was limited overlap between the two in the supply of these products.
For longer-life, readily transportable products such as cheese, dairy ingredients and chilled yellow spreads, the ACCC found that retailers and wholesalers would also continue to benefit from import competition.
Fonterra's Oceania business includes its fresh milk plant in Takanini, South Auckland. It's unclear whether Lactalis will move into the NZ market or Fonterra will have to find a separate buyer for its NZ operations.
Lactalis is a privately owned company primarily owned by the Besnier family, through the Belgian holding company BSA International SA.
