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.
Addressing the co-op’s annual meeting in Palmerston North last week, Spierings referred to six global milk pools – three in the southern hemisphere (New Zealand, Australia, South America) and three in the north (Europe, North America, China).
Spierings defends the concept of expanding global milk pools. “Milk pools gives us access to safe, quality milk and we need extra milk to stay relevant.”
He stressed that all milk pools will deliver quality milk. “The same standards apply in all milk pools as in New Zealand.”
When Fonterra was formed 12 years ago it processed 13 billion litres of milk in New Zealand; today, it picks up 21b L in New Zealand, Australia, Chile and China.
Spierings says Fonterra’s ambition is to pick up 30b L by 2025; more milk will come from pools in Europe and China.
Most of the extra milk will be turned into products for China; the Australian milk pool will process cheese, whey and infant formula and Europe will turn its milk into whey for China.
Spierings says the milk collected from Fonterra farms in China will be turned into UHT products and food service ingredients for the domestic market.
New Zealand milk products will go mostly to China, Middle East and Africa.
