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.
He says four years ago the relationship was “non-existent”.
“I think there has been a change in attitude. Relations with the Government has been as good as it has ever been,” McBride told the Northland Dairy Development Trust online conference last week.
During a question-and-answer session, McBride was asked if the agriculture sector’s economic contribution during the Covid pandemic was recognised and had changed the view in Wellington.
“They understand the issues, the tension and potential impact on overseas earnings and how important agriculture is.”
Speaking on greenhouse gas emissions and water quality legislation pondered by the Government, he says the farming sector is being challenged by the speed of travel.
The cooperative has been told by its sustainability advisory board to expect sustainability issues to travel faster, not slower.
McBride notes that it’s not necessarily the Government that is driving changes.
“It is corporations, consumers; it’s a global issue that’s coming at us like a steam train.”
At the end of the day, what matters is how the sector adopts and responds to changes, he adds.
McBride says while he understands there’s angst around, he doesn’t believe the push for emissions legislation is unique to NZ.
“From an emissions perspective, I don’t think it’s out of whack with where the global trend is.
“I think you can say we are laggards in that regard.”
McBride says the water quality issue is different, driven by philosophy and going beyond consumer expectations in some regards.
“I think the emissions one is a different story. From an emissions perspective, our objective is to turn the perceived threat into opportunity.
“It is how we adopt and how we change; doing nothing is not an option.”
Meanwhile, Fonterra has again lifted its 2021/22 forecast Farmgate Milk Price range to $9.30 - $9.90 per kgMS, up from $8.90 - $9.50 per kgMS.
This now sees the midpoint of the range, which farmers are paid increase by 40 cents to $9.60 per kgMS.
Fonterra chief executive Miles Hurrell says the lift in the forecast reflects the increase in global dairy prices since the co-op’s last milk price update in January and good ongoing global demand for dairy.
