Tuesday, 14 December 2021 09:55

Fonterra gets its house back in order

Written by  Sudesh Kissun
Fonterra chief executive Miles Hurrell told the annual meeting that the co-op had got its balance sheet into a healthier position and can now look more to the future. Fonterra chief executive Miles Hurrell told the annual meeting that the co-op had got its balance sheet into a healthier position and can now look more to the future.

An efficient New Zealand manufacturing base, diversified markets and a global supply chain helped Fonterra stay ahead of the game during the pandemic.

So said chief executive Miles Hurrell at the co-operative's annual general meeting in Invercargill last week. He claims that, as a result, Fonterra got its balance sheet into a healthier position and can now look more to the future.

"As an intergenerational business, that's incredibly important," says Hurrell.

"We leaned on a number of the co-op's strengths to get us to this position.

"And these strengths have been invaluable as we've faced into the challenges and flow-on effects of Covid."

Hurrell says the NZ manufacturing network and team provided a huge amount of optionality in terms of the products they can make.

"Our people are focused on driving efficiency and improving performance at each of our plants. This continuous improvement creates more value, which flows through into the farmgate milk price."

He claims another huge asset is the co-op's diversification across channels and markets.

Hurrell noted that last year, volumes and earnings were "more or less evenly split" across three regions (Asia/Pacific, Africa/Middle East and Greater China) and three channels (ingredients, food service and consumer).

"This diversification allows us to allocate milk into the products and markets that generate the best overall returns for the co-op," he explained.

In 2021, Fonterra allocated 15% more milk into Greater China and 6% less into Africa/Middle East.

"We did this because that's where demand was the strongest."

Hurrell says Fonterra's third strength is its global supply chain - including Kotahi, a joint venture with Silver Fern Farms.

"It's because of our scale that Kotahi could partner with Maersk shipping line and the Port of Tauranga. And it's because of this partnership that our co-op could continue to get product to our customers last year," he notes.

"With all the disruptions to the global supply chain, this was something our customers didn't take for granted and we saw this reflected in both milk price and earnings."

More like this

Staying put

OPINION: Your canine crusader understands calls by the Waikato Chamber of Commerce for Fonterra HQ to quit its Auckland office for the dairying heartland has been rebuffed.

Back and loving it!

South Canterbury farmer Leonie Guiney is ecstatic to be re-appointed for another three year term.

Your move Minister!

Fonterra chairman Peter McBride was immediately on the phone to Agriculture Minister Damien O'Connor after the result of last week's capital structure vote.

National

The year in review

As 2021 draws to a close and 2022 approaches, Leo Argent takes a look back at the year gone by,…

Machinery & Products

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Do the maths!

OPINION: The Hound sees Greenpeace is still demanding the demise of farming in this country.

That Guy!

OPINION: Your old mate had a bit of a giggle at current Agriculture Minister Damien O'Connor's effusive praise of the…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter