Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
He says the rate of change on-farm, Covid, labour shortages and environmental reforms have pushed many farmers into protest, and others out of the industry.
He told Fonterra’s annual general meeting in Invercargill today that some of that change is being driven by regulation.
“More so, it is being driven by consumer, customer and community expectations,” he says.
McBride told the meeting that last year one of Fonterra’s biggest customers stopped doing business with 47 of their suppliers because they did not meet their sustainability standards.
“These suppliers couldn’t help them achieve their future sustainability targets.”
McBride reminded farmers that they need to learn to live with constant change.
“An industry that understands consumer insights and has a customer orientation will ultimately be successful.
“Coordinated change at a national level is also necessary if we want to keep the commercial competitive advantage that comes with being the world’s most carbon efficient dairy farmers.”
He says through a science-backed approach and nationally coordinated investment, together both industry and Government can solve the significant challenges of methane and water quality, while continuing to grow the sector’s export earnings at a sustainable pace.
“Fonterra will do our bit. One of the responsibilities of being a national co-operative of scale is having a meaningful voice in conversations with the Government about realistic timeframes for the changes that are needed.
“Our scale also affords us the mandate and resources to be part of the search for solutions on behalf of farmers.
“That’s why, as part of our long-term strategy, we announced our intention to approve funding of $1 billion for sustainability initiatives to meet the co-op’s environmental commitments and develop more sustainable offerings for customers.
“We also announced an intention to increase spending on research and development to approximately $160 million a year by 2030, that’s a 50% increase on today.”
