Thursday, 14 September 2023 07:55

Dairy company returns churn!

Written by  Leo Argent
Fonterra fell from sixth to ninth place last year in the revenue ranking of the world’s top dairy companies. Fonterra fell from sixth to ninth place last year in the revenue ranking of the world’s top dairy companies.

Revenue performances of the world’s leading dairy companies has shown a major reshuffling over the last year, with Fonterra falling from sixth to ninth place amidst other companies shifting positions.

According to the 2023 Rabobank Global Dairy Top 20 report, only five of the Top 20 companies retained the same positions as last year, with French company Lactalis maintaining the top spot — while Dairy Farmers of America (US) moved up to second place, pushing Nestlé (Switzerland) into third.

A stronger US dollar and unfavourable reporting of the NZ dollar influenced position changes in the ranking – with the combined turnover of the Top 20 companies jumping 7.4% in US dollar terms. Fuelled by a second round of warinduced inflation, EU dairy product prices rallied to new annual average highs. This followed the prior year’s gain of 9.3%.

Rabobank dairy analyst Richard Scheper said overall, year-on-year average price gains in butter, cheese, milk powders and other dairy products set the stage for double-digit turnover growth in local currencies in 2022. However, he added most turnover gains were absorbed by exploding costs, leaving little on the companies’ bottom lines.

“Many dairy companies paid record-high average farmgate milk prices to offset large farm input costs. At the factory gate, rising energy costs and the availability of natural gas – especially in Europe – were the largest concerns for energy-intensive dairy processing. Costs for other components, such as logistics, packaging materials, and labour, also escalated in 2022.”

The report says that in Oceania and the US, milk powder prices were also elevated, but failed to exceed 2013’s record levels. At the same time, lower-than-anticipated milk production growth in the main exporting regions and decent domestic demand contributed to an overall tight dairy market with limited exportable surpluses during most of 2022.

Fonterra’s slip is partly explained by the continuing disposal of non-core assets while adjusting to pressure on milk volume growth, as well as the unfavourable NZ dollar.

The co-operative sold its Chilean subsidiary Soprole in early 2023, resulting in an estimated drop in revenue of about US $800m. Fonterra’s planned sale to Lactalis of DPA Brazil, a joint venture with Nestlé, is still pending.

More like this

Chinese strategy

OPINION: Fonterra may have sold its dairy farms in China but the appetite for collaboration with the country remains strong.

LCAs tackle false narratives

The quest to measure, report and make sense of the energy that goes into food production has come a long way in the past 25 years.

$3b windfall?

Fonterra's proposed sale of its global consumer business could fetch over $3 billion but not all proceeds will end up in the pockets of farmer shareholders.

Featured

Better animal genetic gain system

A governance group has been formed, following extensive sector consultation, to implement the recommendations from the Industry Working Group's (IWG) final report and is said to be forming a 'road map' for improving New Zealand's animal genetic gain system.

SIDE 2025's new schedule, venue

Annual farmer gathering, the South Island Dairy Event (SIDE), is set to make history as it heads to Timaru for the first time.

Taranaki piggery goes solar

Installing 400 solar panels at their Taranaki piggery and cropping operation will have significant environmental, financial and animal welfare benefits for the Stanley family.

Editorial: Keep FTAs coming

OPINION: The dairy industry will  be a major beneficiary of a new free trade deal between NZ and the Gulf Co-operation Council (GCC).

National

Food charity to hold online auction

Meat the Need, New Zealand’s dedicated charity delivering locally sourced protein meals to food-insecure communities, is launching an online National…

Machinery & Products

An ideal solution for larger farms

Designed specifically for large farms that want to drill with maximum flexibility, efficiency and power, the new Lemken Solitair ST…

Landpower increases its offering

Landpower and the Claas Harvest Centre network will launch the Claas Scorpion and Torion material handling solutions to the market…

» Latest Print Issues Online

The Hound

Leaky waka

OPINION: Was the ASB Economic Weekly throwing shade on Reserve Bank governor Adrian Orr when reporting on his speech in…

Know-it-alls

OPINION: A reader recently had a shot at the various armchair critics that she judged to be more than a…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter