increase font size
Fonterra chief executive Miles Hurrell has warned suppliers that many of its key customers have sustainability requirements that the co-op must meet and improve upon or risk losing their business.
Fonterra has told its farmer shareholders that on-farm sustainability must improve further or the co-op could lose $300 million of annual business from key customers.
The co-op says sustainability on farm is a fundamental requirement for most of its customers now.
In an email to farmer shareholders last week, Fonterra chief executive Miles Hurrell said many of its key customers have sustainability requirements “that we must meet and improve upon, and they regularly check up on us”.
“Collectively these customers represent over $2 billion in revenue annually and it’s estimated that approximately $300 million could be at risk if we do not meet their expectations.”
Hurrell made the comments as he announced a new milk payment linked to higher quality milk from supplying farms.
The new maximum payment of 10c/kgMS will be paid from the next season to farms meeting the co-op’s on-farm sustainability and value targets.
Presently, Fonterra farmers producing milk with lower somatic cell counts receive Farm Source dollars that can be redeemed at its stores. The new payment replaces Farm Source dollars and will be funded out of the farmgate milk price.
“The total farmgate milk price will remain the same across the cooperative, but the amount that each individual farm is paid will vary depending on their contribution,” says Hurrell.
“We’ve always paid our farmers based on the value that milk provides to the cooperative. The reality is that the drivers of value are changing, and we need to reflect that. Our customers want to know that the products they are buying are not only safe, but also produced sustainably.
“This payment helps us meet the changing needs of our customers, so they continue to choose our milk and enjoy dairy as a sustainable and nutritious choice.”
Hurrell says Fonterra is now seeing customers from across the globe requiring it to not only meet and improve upon their requirements, but also provide proof of completion.
“The risk is that these customers will move to competitors if they can demonstrate better performance, or a substitute for non-dairy products with lower footprints,” he says.
Nestlé spokesman Robert Erhard says at the world’s largest dairy company, how milk is produced matters.
“Now more than ever, people expect farmers to act as good stewards of the land – safeguarding the climate, enhancing animal welfare and carefully managing water and the health of soils.”
Northland farmer Terence Brocx says farmers put in a lot of effort to produce the best quality milk possible.
“Over recent years, large numbers of farmers have spent a significant amount of time and money to improve their local environment and waterways to make their farms sustainable for the future.
“It’s great to see these farmers distinguished and rewarded for their efforts to produce and deliver a product that Fonterra can capture the highest value from,” says Brocx.
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…
