Fonterra investigates Australian co-op

By Geoff Adams

Fonterra is investigating whether its Australian operation could become a co-operative, and will put information to its Australian suppliers in April.

Fonterra managing director, Rene Dedoncker said the issue has been raised by Australian farmers.

“By the end of March will have finished the first part of the work and in April will take the proposal to farmers, of new ownership models, including a co-operative.

“If farmers have an appetite for that, then we would go the next step,” Mr Dedoncker said.

Fonterra is a farmer owned co-operative in New Zealand but runs as a private company in Australia.

Asked how the New Zealand shareholders would react, Mr Dedoncker said it was no secret and they were talking to New Zealand stakeholders about it.

“Farmer to farmer, they embrace the idea of more farmers having skin in the game in Australia.

“How it comes to fruition is the next piece of work that we need to look at, but they are positively disposed.”

Asked about pricing, Mr Dedoncker said they knew they needed to have a competitive farm gate milk price every day.

“Our milk price is $5.60/kg milk solids following a step-up prior to Christmas.

“In addition to the $5.60 there is the 40c milk payment, taking the total to $6.

“We are confident that price is sustainable in the season.”

Meanwhile the company will be looking for up to 200 million litres of milk to satisfy its $165 million investment in factory expansions across Victoria.

About $125 million will be spent on the company’s Stanhope cheese factory, which it had only recently upgraded.

“We have a clear strategy that is delivering sustainable returns. To create value, we need to invest to stay ahead of the demand curve. These investments support our aim to secure positive returns back to our farmers on both sides of the Tasman.”

“We are looking for the next 200 million litres of milk,” Mr Dedoncker said.

“We are seeing a boost in production, particularly in the north.

“We hope an extra 60 to 80 million litres will come from our own farmers.

“We do see the need for more farmers. We have a number interested in joining. It will be a mix.”