Fonterra told to step up to plate

Photo / Christine Cornege

Fonterra's strategy has to start delivering or its market share will shrink further, says Federated Farmers Otago dairy chairman Stephen Crawford.

The results of small Waikato-based dairy co-operative Tatua and West Coast-based Westland Milk Products might well "far exceed" Fonterra's, so it could eventually have to front up and stop blaming volatility, which was experienced by all players in the market, Crawford said.

"Fonterra's six-monthly results were disappointing, to say the least. The share/unit price has tumbled accordingly to below its float price, the market has spoken and confidence in New Zealand's No 1 rock star business has dwindled," he said.

The dividend was poor and Fonterra's strategy needed to start delivering or its 86 per cent market share would shrink further. It was 96 per cent when the co-operative was formed in 2001, he said.

Outgoing Federated Farmers Otago president Stephen Korteweg, who is also a dairy farmer, said dairy farming had "definitely seen highs and lows" over the past 12 months.

"Forty-six per cent back on last year's record price and a substantial rise will still be needed by the end of the season if we are going to get to the $4.75 forecast," Korteweg said.

The dividend amount, at around 25c-30c forecast, was disappointing.

The real financial pain would be felt from the new season to about December, when cash flow was likely to be very tight, he said.

North Otago Federated Farmers dairy chairman Lyndon Strang saw the big challenges in the short term falling into three main areas - human, animal and environmental.

Strang said the Ministry of Business, Innovation and Employment was increasing staff numbers and putting a focus on the agricultural sector. Federated Farmers was also working with government agencies to ensure employment legislation was workable.

Stock must be treated humanely. Social media would continue to "reveal to the world" those not meeting basic standards.