Tuesday, 13 November 2018 07:55

Fonterra drops 30b litre target

Written by  Sudesh Kissun
New Fonterra director Leonie Guiney and husband Kieran at the co-op’s AGM. New Fonterra director Leonie Guiney and husband Kieran at the co-op’s AGM.

Fonterra is dropping a target to achieve 30 billion litres of milk volume by 2025.

The announcement by chief executive Miles Hurrell marks a major departure from the V3 strategy implemented by former chief executive Theo Spierings.

In 2012, Spierings unveiled its V3 strategy involving “volume, value, and velocity” aimed at increasing milk production volumes to ensure Fonterra maintains its share of the growing dairy market, driving more value from its milk through higher-value products, and doing so at speed.

Hurrell told Fonterra’s annual general meeting last week that when he took over a few months ago, he promised to take stock of the business, get the basics right and ensure more realistic forecasting.

“We have dropped our volume-based ambition,” he told about 400 farmers at the AGM held at its Lichfield plant in South Waikato.

“Our ambition to achieve $35 billion in revenue from 30 billion LMEs (liquid milk equivalent) by 2025 created confusion because it places too much emphasis on volume.

“Our co-op is not about being big for the sake of it.

“We’re about creating value for our farmers, our unitholders and for NZ. That doesn’t change.”

Hurrell also spoke of the need to maximise the NZ milk pool and not creating volume through farm developments around the world.

“When we shifted to talking about off-shore milk pools, we also created confusion.

“The concept of global milk pools can sound like we are creating volume through farm developments around the world.

“This is not what we are doing; I think it is important to clarify this.”

Hurrell says Fonterra’s approach has always been to generate global demand for its full suite of NZ-made products.

Hurrell says Fonterra has long-standing relationships with farmers in Australia and Chile.

“These allow us to make products locally, meet demand in overseas markets and take advantage of any lower tariffs that may exist. “This continues to be the right approach.”

Fonterra’s China farms recorded a direct loss of $9m last year.

 

More like this

Fonterra lifts global ranking

At least some not-bad news for Fonterra: the co-op has climbed to fourth-largest in the world’s dairy company rankings.

Payout unchanged, dividend axed

Farmgate milk price forecasts remain unchanged despite Fonterra’s decision to not pay a dividend for the 2018-19 season, says chief executive Miles Hurrell.

 
 

» The RNG Weather Report

» Latest Print Issues Online

Milking It

Milk on tap

The days of cafes getting milk in plastic bottles may be numbered if two young Dunedin entrepreneurs have their way.

Behind the eight ball

Global animal health company DSM says it has a product that can help reduce emissions from cows by up to…

» Connect with Dairy News