Soaring whole milk powder (WMP) prices are lifting forecast milk price to Fonterra farmer suppliers but it is also affecting the co-op’s profitability.
The co-operative has announced a review of its Australian business as part of a new long-term strategy focusing on New Zealand milk.
The co-op is considering the most appropriate ownership structure for Fonterra Australia. One option includes an IPO, with the intention that the co-op retains a significant stake.
Fonterra Australia Suppliers Council chairman Alan Davenport says he hoped that ownership options could present opportunities to further align supplier interests.
“Farmers are already proud to supply milk for a fantastic stable of local brands, and I am pleased that one of the options under consideration is an IPO of Fonterra Australia.”
Devonport hopes that any change to the ownership structure “builds on the partnership between Fonterra Australia and its farmer suppliers”.
Fonterra Australia managing director René Dedoncker says it would be a great outcome if Australian investors, including staff and the farmers who supply milk, could have the opportunity to participate in the ownership of the business.
Fonterra Australia owns iconic Australian brands such as Western Star, Perfect Italiano and Bega.
“As we explore our options we will be mindful that our customer and farmer relationships are core to our business,” says Dedoncker.
“These key stakeholders can be confident there will be no change in how we engage with them through this period, while an outcome that results in improved access to external capital will enable Fonterra Australia to continue advancing the Australian dairy industry.”