What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
Environmental restrictions ar impacting on how much more land the dairy industry could occupy. Dairy conversions have dried off while the amount of dairy land is also shrinking. Some farmers had converted land from dairying to forestry or horticulture, or in some cases housing or even solar farms.
So, with new milk processing plants still being built in NZ's dairy heartland, what does this mean? It means older, inefficient plans may be forced to shut down. And with Fonterra owning the most number of old plants in the country, this scenario doesn't bode well for the co-operative.
