Fonterra turns to big overseas farms to make up shortfall from NZ suppliers

Supermarkets around the world are selling Anchor milk that is not produced on New Zealand farms.

New Zealand dairy giant Fonterra says it gets nearly 5 billion litres of milk a year from cows in Australia, Chile and, increasingly, China and India.

Most of that, with 17 billion litres from New Zealand cows, is sold overseas. The country of origin is on the back of the package.

Fonterra sells the Anchor, Fernleaf and Anlene brands in the Middle East, Singapore, Asia, Philippines, Sri Lanka, China and India.


Foreign milk is now about 20 per cent of Fonterra's production, but to achieve its growth goals, the company plans to obtain half its milk from overseas sources.

China is a prime focus: Fonterra opened its first Chinese farm in 2008 and its second last year. A third farm is being developed.

Eventually, the three farms will produce 150 million litres of milk a year for Fonterra.

Federated Farmers president Bruce Wills said Fonterra was benefiting from the strength of the "pure New Zealand" brand - even if the products were not from the country.

Millionaire New Zealand businessman Eric Watson and his brother Richard run a big dairy farming operation in the southern US state of Georgia.

In his Herald on Sunday column today, Eric Watson urges New Zealand to forget about "made in New Zealand", and instead promote its brands overseas as "made by New Zealand".

This would enable exports such as milk from overseas farms run by the Watson brothers, Fonterra and its joint venture partners, to be branded as New Zealand-made.

It would recognise the New Zealand investment and initiative that had gone into the product, while enabling companies to take advantage of cheaper overseas farmland, feedstuffs and labour.


Green Party co-leader Russel Norman criticised the proposal: "If we start putting 'Made by New Zealand' on products produced overseas, we really are going to confuse our overseas customers and they are going to start thinking the New Zealand brand is a bit suspect."

Council of Trade Unions president Helen Kelly said it was misleading to use a brand associated with New Zealand to market products that were not made here. "Particularly around food, people might think they are buying something they are not getting."

The melamine scare had highlighted the dangers of outsourcing production, she said, and New Zealand companies would be better off re-investing in local New Zealand workers and the local economy. But Fonterra said Anchor was a global brand - as well-known in Sri Lanka as it was in New Zealand.

Bruce Wills said dairy farmers had got used to the idea of Fonterra obtaining milk overseas. But he agreed with Norman and Kelly that if Fonterra was using New Zealand's honest reputation to its advantage overseas, the dairy giant needed to safeguard that reputation.

"Being trustworthy is a powerful part of our marketing message. "We're seen as a country with integrity, which is hugely important when it comes to safe food."

He said other countries were already looking to capitalise on that. Infant baby formula maker Yashili was opening open a plant at Petone.


Fonterra needed a constant milk supply, but New Zealand production was seasonal, he said.

"It's the same with meat, we can supply six to eight months a year but supermarkets want it for 12 months' so they have to get it from overseas."

Beef and Lamb NZ chief executive Rod Slater said shoppers would start to see Australian meat on supermarket shelves in about six weeks.

Because country-of-origin labelling was not compulsory, some might not realise where their meat was coming from.

"We have the New Zealand beef and lamb quality mark ... If consumers don't see it, it could still be New Zealand meat but it might be Australian."