Fonterra boosts intake to 2b litres

By Dairy News

Fonterra has surpassed its target of increasing milk supply to 1.9 billion litres and is now tracking closer to 2 billion.

Two billion litres means the company sits just below Murray Goulburn as Australia’s largest processor, with the Australian co-op’s supply falling to about 2 billion as a result of its supplier exodus.

Mr Dedoncker said the company had set a target of increasing milk supply to about 1.9 billion litres and had achieved that in recent weeks.

“Last year we finished at 1.5 billion litres and now we are tracking closer to 2 billion,” he said.

“A lot of that is coming here to Stanhope but much is also going to Darnum and to Cobden and Spreyton in Tasmania.

“That is creating the net milk we need to run our factories efficiently and to deliver profit at the farm gate.”

Asked where the company was positioning itself with industry leader Murray Goulburn losing suppliers, Mr Dedoncker said its ambition was not to be number one, but it could end up taking the lead.

“We have a clear strategy and we are implementing that strategy,” he said.

“We may happen to be the largest but that’s not our focus.

“Our focus is to get the right amount of milk, cheese, whey, nutritionals.

“If the outcome is becoming number one, that’s what it will be.”

Fonterra opened early this season with $5.30/kg of milk solids and then stepped up to $5.50 kg.

Mr Dedoncker said Fonterra was confident the price was reflective of market forces.

“But we won’t move early, we will only move when we know we have made those decisions that are returning the earnings.

“But we feel it will be a great year for farmers.”

He said the potential was to move to $5.80/kg MS this season.

“The $5.50 is attracting farmers to Fonterra. I think our behaviour is also doing that as well.

“We have completely changed our behaviour in the way we listen to our farming community and the decisions that we make.”

Mr Dedoncker was appointed to his position just after the milk price crash and admitted that meeting face-to-face with farmers affected by the price cut was “brutal”.

“We’ve learnt a lot from that.”

He said he was now offering a different approach and the company was “looking them in the eyes”.

“If we don’t take a step towards farmers and protect their interests there is going to be a massive problem. We have to take shocks out.

“Farmers want transparency and they want to know that the price they are getting reflects what is going on in the world.”

He said the company had improved its communication with its suppliers, sending a four-page report out every four weeks.