Fonterra has unveiled plans to overhaul its capital structure.
Dutch-based CRV Holdings chief executive Roald van Noort says price fluctuations are becoming the norm and farmers must be prepared.
He made the comments at the recent opening of a new domestic and export-approved bovine semen production and logistics centre for New Zealand subsidiary CRV Ambreed in Hamilton.
CRV, a leading global exporter of semen, also had to cope with erratic milk prices, says van Noort.
“Dairy farmers [must] beef up their balance sheet like we do as a business; we also have to cope with the same issues,” van Noort told Rural News. “Fortunately we have a broad portfolio and have business all over the world; that’s how we spread our risk.”
He is forecasting a rebound in dairy prices; demand is bigger than supply and will stay that way for another decade.
However, “unforseen political incidents” are throwing a spanner in the works. “Political issues like the Ukraine conflict aren’t something you can anticipate.”
China has also overstocked dairy products and this is pressing prices down, he adds.
“I would call for greater transparency in the industry, so that all farmers are connected to world prices on a daily basis. Stocking practices need to be transparent as well.”
The CRV Bellevue production and logistics centre, on the outskirts of Hamilton, gives the company more capacity in bovine semen products. It has a semen collection facility, a semen processing laboratory, storage for export and domestic products, a warehouse with farmer AI banks and 38ha of grazing.
Van Noort says CRV is focused on sustainable growth, necessitating R&D and innovation to enable dairy farmers to produce more with less.
“We are proud today to open these premises. In this location we have everything we need to help produce more protein with less resources for the population in 2015 – in a clean, safe and inspiring way.
“We have biosecurity here that is unrivalled in the southern hemisphere, and for CRV globally.”
Primary Industries Minister Nathan Guy acknowledged CRV’s role in improving the efficiency of the dairy industry in New Zealand and around the world.
The new centre is a vote of confidence in the New Zealand dairy industry, he says. “[CRV] has a long-standing investment here in the dairy industry. I believe New Zealand farmers are the best in the world, and one of the best and biggest contributors to our increased productivity is indeed genetics.”
CRV Ambreed managing director Angus Haslett says the centre’s opening marks the start of an exciting era for the company.
“The CRV Bellevue production and logistics centre was developed to the highest standards required to ensure our business meets its domestic and export compliance, biosecurity requirements and animal welfare standards,” says Haslett.
CRV Ambreed is part of the third-largest artificial breeding company in the world with about 25% market share in New Zealand. It exports semen to South America, South Africa, Australia, parts of North America, the UK and Ireland.
The company annually distributes about 1.8 million straws of semen in New Zealand and overseas.