Fonterra Suppliers Confident in Mainland Dairy Future
Fonterra's 460 milk suppliers in Australia, who will switch to Lactalis end of this month, are unfazed with the impending change.
In his annual report delivered to Fonterra's shareholders at the co-op's annual meeting in Christchurch last week, Co-operative Council chair John Stevenson says post the divestment of the Mainland Group the co-op will have a stronger focus on the Ingredients and Foodservice businesses, which generate the highest returns today.
"Our board and management see further opportunity in these businesses for growth, and are confident this new direction will create a higher performing co-op.
"Our role is to monitor and report back to you on how well Fonterra executes on this new direction. As part of this we will not just monitor headline returns. We will also have a keen interest in how much milk Fonterra is able to shift into higher returning products, Fonterra's efficiency, and its capital discipline."
Stevenson says that over the last 18 months there has been a significant change in the strategic direction of the co-operative. Fonterra shareholders approved of the sale of the Mainland Group to Lactalis for $4.22 billion.
He says this has been one of the biggest decisions Fonterra shareholders have made.
Stevenson urged shareholders to maintain a strong co-operative, noting that there was strong competition across a number of regions for milk.
Read More:
- Revamped Fonterra to be 'more capital efficient'
- Dairy sector profit still on the table, but margin gap tightens
- Fonterra capital return could boost GDP - ANZ Report
"Fonterra is increasingly unique in that it is owned and controlled by farmers. As a co-operative we know that our milk will be picked up every day and that we will receive the highest sustainable price for our milk.
"As well as giving us control of our destiny and certainty, our co-op and its scale also offers us stability and a variety of product mix options, and together these considerably de-risk our dairy farming businesses.
"It's critical to support Fonterra and to build on what we've got. A strong farmer-owned co-operative of scale in our dairy industry is important to every New Zealand dairy farmer, as well as the country as a whole."
