Fonterra Whareroa sets cheese record, wins top award
Fonterra Whareroa wrapped up a successful season with a record-breaking cheese production volume and several gongs at the co-op's annual Best Site Cup awards.
A planned public listing of Fonterra’s Australian business will attract investors, including dairy farmers, claims Freshagenda analyst Steve Spencer.
However, he believes a buyout by another Australian dairy player looks unlikely due to competition issues.
An ownership review of Fonterra Australia is underway as part of the co-operative’s new strategy to add value to its New Zealand milk.
Fonterra says any option would need to consider the co-op retaining a significant stake in Australia. Options could include partnering with a strategic or financial investor.
The ownership review should be completed by the end of this year but any change to the ownership structure is still 12 months away.
Fonterra claims the Australian business is in a strong position, not only in earnings but also reputation with its customers and importantly its farmers.
However, Spencer says investors will await the IPO documents to see how the Australian business gets carved out of the group results.
“There is not enough visibility to see that completely at this stage,” he told Rural News. “I think there will be investor appetite – depending on the pricing and performance that is laid out in an IPO.
“There are few opportunities for public and institutional investment in the food sector and the growth, depth and diversity of dairy markets is a good story.”
Spencer also expects Australian farmers, especially those who currently supply Fonterra, to be interested in buying shares.
“I’m sure there will be some interest but that will be clarified by the company in its engagement.”
But there will be few options for large players to take out this business without competition issues due to the crossover in product segments.
Spencer says Lactalis could be a potential buyer if the business suits their global business model.
“They don’t have competing opportunities in other markets – Saputo and Bega would be ruled out.”
Australian dairy consultant John Droppert believes farmers will wait and see what comes out of the ownership review.
“I suspect most suppliers will just be curious to see what comes of it and what the ongoing linkage to Fonterra global would be under any proposal,” Droppert told Rural News.
Fonterra Australia Suppliers Council chairman Alan Davenport hopes that ownership options could present opportunities to further align supplier interests.
“I look forward to working with Fonterra Australia to ensure any change to the ownership structure builds on the partnership between Fonterra Australia and its farmer suppliers,” says Davenport.
Fonterra is a market leader in Australia in butter and cheese with iconic brands like Western Star, Perfect Italiano and Bega.
OPINION: Ministry for Primary Industries' situation outlook for primary industries report (SOPI) makes impressive reading.
Sheep and beef farmers Matt and Kristin Churchward say using artificial intelligence (AI) to spread fertiliser on their sprawling 630ha farm is a game changer for their business.
Commercial fruit and vegetable growers are being encouraged to cast their votes in the Horticulture New Zealand (HortNZ) board directors' election.
A unique discovery by a Palmerston North science company, Biolumic, looks set to revolutionise the value and potential of ryegrass and the secret is the application of ultraviolet (UV) light.
A New Zealand company is redefining the global collagen game by turning New Zealand sheepskin into a world-class health product.
With further extreme weather on the way, ANZ Bank is encouraging farmers and business owners impacted by the recent extreme weather and flooding to seek support if they need it.
OPINION: Dust ups between rural media and PR types aren't unheard of but also aren't common, given part of the…
OPINION: The Hound hears from his canine pals in Southland that an individual's derogatory remarks on social media have left…