Fonterra’s new $150 million cheese plant in Australia will help the co-op further capture the strong global demand for dairy, says chairman John Wilson.
Fonterra Australia last month increased its Australian average farmgate milk price to A$5.20/kgMS, bringing it in line with the forecast closing price for the 2016-17 season.
Individual suppliers’ milk prices will vary between Fonterra’s supply regions depending on the individual farm’s milk profile, regional production factors, milk quality and farm management systems.
Fonterra Australia managing director René Dedoncker says this revised price reflects improvement in the global commodity markets and progress on key initiatives for the Australian business.
“Production has fallen in the major exporting regions, particularly Europe and New Zealand, and we’ve seen a significant decline in Australian milk supply.
“This has helped to rebalance global supply, while demand has remained firm. As a result there has been a steady improvement in global dairy commodity prices and this is reflected in our farmgate price.
“Our strategy continues to progress, helping us to rebalance our product mix into products generating those higher returns, which we’re able to deliver back to farmers at the farmgate,” says Dedoncker.
Over the past six months Fonterra has achieved a number of key initiatives:
Strong growth in the ingredients business, with almost 1000 containers of cheese, whey and nutritionals exported to key global customers in December and January
The construction of the multi-million dollar Stanhope cheese plant and expansion of the Cobden coolroom are also going well: Stanhope is on track for completion in mid-2017, and the Cobden coolroom is ready for growth in Western Star from April
The Beingmate joint venture at Darnum is under way, and the first product made under the JV is now in production, destined for China.
“The progress we’ve made on our strategy, coupled with improvements in the global dairy market, has enabled us to raise payments to our farmers,” he says.