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.
Fonterra says its decision to delay payments to some creditors by up to 90 days is nothing new and suppliers should "align" themselves to it.
Only 2000 of its 18,000 suppliers are affected, says chief financial officer Lukas Paravacini.
"We are aligning to a payment condition that always existed, and people should expect in [this time of low payout] to very quickly align.
"We are very conscious of the role we play in the community beyond our farmers. This [slow payment] touches roughly 2000 of the 18000 suppliers; we are not touching 16,000 of them because we understand the impact that will have."
Fonterra has extended by two months the time it takes to pay suppliers, from 30 to 90 days, saying this matches what it does in other countries.
It has also asked some suppliers to cut their charges by up to 20%.
A backlash by some businesses has prompted the Green Party to ask the Government to intervene; the party accuses Fonterra of using its size to bully its suppliers and contractors in rural areas.
Meanwhile, Fonterra will give an update of its debt level on March 23 when it presents half-year results.
Last year the co-op said its gearing ratio rose to 49.7% from 42.3% a year earlier, but was 46.4% when adjusted for a $900 million advance payment to farmers. The co-op formerly aimed for a gearing ratio of 40-45%.
Paravacini says the co-op spent heavily on its New Zealand operations last year. It has since decided not to increase its debt levels.
"We made it clear in our Q1 results that we expect gearing ratio to go to 40-45% by the year's end."
He says Fonterra remains a very sound business.
NZPork has appointed Auckland-based Paul Bucknell as its new chair.
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Foot and Mouth Disease outbreaks could have a detrimental impact on any country's rural sector, as seen in the United Kingdom's 2000 outbreak that saw the compulsory slaughter of over six million animals.
The Ministry for the Environment is joining as a national award sponsor in the Ballance Farm Environment Awards (BFEA from next year).
Kiwis are wasting less of their food than they were two years ago, and this has been enough to push New Zealand’s total household food waste bill lower, the 2025 Rabobank KiwiHarvest Food Waste survey has found.
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