Mat Cullen, Farm Source’s Regional Head for the South Island.
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Fonterra farmers had plenty to digest last week, with a new chief executive announced, capital returned from the consumer divestment, and a higher milk price putting real money into bank accounts.
Mat Cullen, Farm Source’s Regional Head for the South Island, was among those kept busy.
He’d been attending the South Island Dairy Event (SIDE) at Lincoln University, where he said the divestment was a “hot topic”.
“There was a fair bit of checking of internet banking on phones on the Tuesday, I can assure you,” he told The Country’s Michelle Watt.
On Tuesday, Fonterra farmer shareholders received a $2‑per‑share capital return from the divestment of its consumer business. The co‑operative also paid an interim and special Mainland dividend totalling 40 cents.
“When you combine that with the lift in the forecast milk price last month to $9.70 and the corresponding lift in advance rate, it adds up to around $5.4 billion across more than 8000 farmers – so some really, really strong numbers," Cullen said.
While individual payments will vary, the average payout was estimated at around $400,000.
So where will that money be spent?
“From the conversations I’ve been having with farmers, we’re likely to see them putting that money towards paying down some debt,” Cullen said.
“Perhaps some capital expenditure on-farm, and also quite a few discussions about growth and enabling farm succession.”
Cullen said farmers had also responded positively to the announcement that Richard Allen was Fonterra’s new chief executive.
“For many of our farmers, Richard’s a pretty familiar face, as they’ll have either come into contact with Richard or interacted with him during his time overseeing Farm Source.”
Meanwhile, Fonterra’s organics programme is growing, with the co-op announcing its plan to expand to the South Island earlier this year.
Cullen said recruitment had gone well so far.
“We’ve reached about 75% of our target milk solids – that’s the target that we need to hit before we can start work at our Stirling site to be able to process organic milk there for the 28/29 season.“
He said Fonterra had spoken with farmers at local field days, introductory sessions and on-farm events, finding that many were interested and learning more about organics.
He encouraged any farmer considering organics to get in touch.
“Come and have a chat with one of your local Farm Source team, come along to one of our events. We’re really happy to share what’s involved to see if it fits with your farming system and what that conversion process might look like.”
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Overall, things were ticking along nicely in the South Island, Cullen said.
“We’re tracking really well towards the end of the season – a couple of acute weather events aside – we’ve seen some pretty favourable on-farm conditions, and they’ve supported really strong milk production.“
He said Fonterra’s season-to-date milk collections were close to 2% above last season, with the increase mainly due to higher collection in the South Island.
“Farmers have been doing an awesome job of putting milk in the vat.”
Looking ahead, Cullen said farmers were “carrying some really positive momentum from this season into next”.
He also acknowledged growing uncertainty around global supply chains due to the Middle East conflict.
“We do really want to reassure farmers that we’re drawing on our collective scale and strength as a co-op to really help manage those impacts, both from a perspective of getting their products out to market around the globe and also from an on-farm perspective.”
Cullen said retail teams were working closely with vendors to maintain strong product availability and keep prices as stable as possible across Farm Source stores.
“Any changes there, we’ll absolutely be keeping farmers informed via our usual channels.”