Why Fonterra is producing ‘a heck of a lot of cheese’

Fonterra is producing enough cheese for 200 million more burgers and 40 million more pizzas worldwide. Photo / Christine Cornege

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Favourable weather and strong grass growth are helping drive milk production across the North Island, with Fonterra reporting a solid start to the season and increased volumes compared to last year.

Nicola McCarthy, Farm Source’s Regional Head for the Lower North Island, said the region was enjoying a good run of conditions.

“There’s certainly plenty of milk around in the North Island,” she told The Country Sport Breakfast’s Brian Kelly.

“The grass is finally growing, and there’s been no shortage of moisture around.

“We could do with a few more sunshine hours, though.”

McCarthy noted that August collections were “up comfortably above this time last year,” with season-to-date volumes tracking about 3% higher.

The co-operative is also investing in its processing capacity, with major upgrades underway at its Eltham site in Taranaki.

McCarthy said Fonterra was expanding Eltham’s cheese-making output.

“So it means an additional 2500 metric tons of cheese slices can be produced at the site each year,” she explained.

“We’ve added another shift onto the Individually Quick-Frozen Mozzarella line, so that means we can pump out an additional 6000 metric tons of mozzarella each year.”

She said that the boost was expected to have a global impact.

“So altogether, that increase in production means about 200 million more burgers and 40 million more pizzas around the world will be topped with Fonterra cheese from Eltham and Taranaki.”

The Eltham site supplies cheese to major Foodservice Quick-service restaurant customers, including McDonald’s and Pizza Hut.

McCarthy said demand was also growing in other areas, such as cheese that goes into high-value ingredients businesses.

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To support that growth, Fonterra is building a new cool store at its Whareroa site, about 20 minutes from Eltham, with capacity to hold around 26,000 tons of cheese.

“Which is a heck of a lot of cheese,” McCarthy said.

Meanwhile, attention has turned to the upcoming farmer vote on Fonterra’s proposed divestment of its consumer business.

“The special meeting’s going to be held on the 30th of October, and that’s when the results will be announced,” McCarthy said.

“Voting’s open recently, so farmers can either vote in advance of the meeting or during it, and we’re encouraging everyone to have their say.”

She said Farm Source managers were hosting extra drop-in sessions to help farmers understand the proposal.

“If approved, post-divestment, Fonterra will be a more focused business with global reach throughout our B2B channels, which include those Foodservice and Ingredients businesses I talked about earlier.”

The sale is expected to generate $4.22 billion, with a targeted tax-free capital return of $2 per share.

“The sale is subject to approval by our farmer shareholders,” McCarthy said.

“And it’s a really important decision for our co-op.”

McCarthy said Fonterra strongly encouraged farmers to review the information, discuss their views, and most importantly, vote.