increase font size
Fonterra Co-operative Council chair John Stevenson says that rising costs have had a real impact on farmers’ bottom lines.
Fonterra farmers have a message for their co-operative - they need to see consistently strong performance in both payout and returns from share ownership.
Fonterra Co-operative Council chair John Stevenson says that rising costs have had a real impact on farmers' bottom lines.
"We can see that with the latest DairyNZ breakeven milk price being above $8/kgMS," Stevenson told Rural News.
"Many farmers have reported to us that they have felt significant financial pressure over the last 24 months. Fonterra needs to execute on their revised strategy to ensure that our returns are well above our costs.
"Council will be keeping a keen eye on how Fonterra delivers on its six strategic devices."
Last week, Fonterra released a revised strategy, promising to deepen its focus on its high-performing Ingredients and Foodservice businesses to grow value for farmer shareholders and unit holders.
Revised targets are increasing average return on capital to 10-12%, up from 9-10%, a new dividend policy of 60-80% of earnings, up from 40-60%, while remaining committed to maintaining the maximum sustainable Farmgate Milk Price.
Chairman Peter McBride says the revised strategy creates a pathway to greater value creation, allowing the co-op to announce enhanced financial targets and policy settings.
"The co-op exists to provide stability and manage risk on farmers' behalf, while maximising the returns to farmers from their milk and the capital they have invested in Fonterra.
"Through implementation of our strategy, we can grow returns to our owners while continuing to invest in the co-op, maintaining the financial discipline and strong balance sheet we've worked hard to build over recent years."
Stevenson says early feedback from farmers indicates that they view the new targets positively.
He notes that delivery of these targets will see strong returns to Fonterra farmers alongside significant investment into growing the co-operative.
"Council views performance as the key to delivery of this strategy, and we will be monitoring and reporting on our view of how Fonterra execute against these targets."
Stevenson says a competitive milk price is critical for Fonterra to deliver on strategy, as there is strong competition for milk from all processors.
"A strong sustainable milk price is the most important number to our farmers, but business performance is very important as well.
"It is pleasing to see a focus in the strategy on Fonterra delivering the strongest farmer offering, including a stronger payout and improving farm cash flow."
Fonterra is also going ahead with plans to divest its consumer businesses in New Zealand, Australia and Sri Lanka.
The co-op says the process is ongoing and progressing well.
Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.
OPINION: Farmer shareholders of two of New Zealand's largest co-operatives have an important decision to make this month and what they decide could change the landscape of the dairy and meat sectors in New Zealand.
OPINION: As CEO of the Dairy Board in the 1980s I was fortunate to work with a team of experienced and capable executives who made most of the brand investments that created the international consumer business Fonterra inherited. Soprole in Chile was the largest, but there were more than 20 countries where consumer marketing companies were established and Anchor and other brands were successfully launched.
Fonterra has delivered a fifth straight year of record organic milk price for farmer suppliers.
Fonterra says favourable weather conditions supporting pasture growth is boosting milk production.
Like many manufacturers around the world, European agricultural machinery and tractor manufacturers are currently operating in a difficult market environment. But they are heading to the world’s largest agricultural machinery event in Hanover next month with a degree of cautious optimism.
Established in 2021, the John Deere Technician of the Year Awards champion the important contribution parts and service technicians make to the Australian and New Zealand agriculture, construction and forestry industries.
Beef + Lamb New Zealand (B+LNZ) is calling on farmers from all regions to take part in the final season of the Sheep Poo Study aiming to build a clearer picture of how facial eczema (FE) affects farms across New Zealand.
New Zealand is closer to eradicating bovine TB than ever before, but possums remain a threat, says Beef + Lamb New Zealand.
Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.
The ACT Party says media reports that global dairy giant Nestle has withdrawn from the Dairy Methane Action Alliance shows why New Zealand needs to rethink its approach to climate.
OPINION: Ageing lefty Chris Trotter reckons that the decision to delay recognition of Palestinian statehood is more than just a fit…
OPINION: A mate of yours truly recently met someone at a BBQ who works at a big consulting firm who spent…
