By LIAM DANN
Fonterra acting chief executive Jay Waldvogel says the agreement he signed with Dairy Farmers of America (DFA) this week will result in improved access to the US market.
The softly spoken American, who leads Fonterra until the arrival of Canadian Andrew Ferrier in September, said the "memorandum of
understanding" moved the relationship on from dealing with joint venture projects one at a time.
"We came to the understanding that it was time to look at how we structured our entire relationship," he said. "It gives us a framework."
With a small number of global customers it was vital for Fonterra to be able to guarantee supply from more than one source.
A good example was Fonterra's relationship with Kraft. The company was a hugely important customer, he said.
"We want to do more with Kraft but as long as product is only sourced from New Zealand there was a limit to how far they'll go ... "
There were perceived risks with the distance, political barriers, and environmental disasters such as drought, he said.
Fonterra could now go to Kraft and say they could supply a milk powder product from two sources.
"All of a sudden Kraft is prepared to commit to a greater percentage of their supply. It is a very clear way that we can sell more product."
There was also great potential to expand the Nestle joint venture into North America with the help of the DFA, Waldvogel said.
Fonterra has an agreement with Nestle which covers all of the Americas but so far it has been developed only in South America.
"If we had to rely solely on putting New Zealand product into Nestle into the US there would be benefits but they would be limited," Waldvogel said. "If we can bring DFA into the relationship we can increase our ability to supply to Nestle."
As dairy farmer owned co-operatives Fonterra and the DFA had many things in common, he said.
"We all want to see higher milk prices, we all want to see wealth created for dairy farmers."
