Fonterra looks at bringing Aussie farmers into the fold

Fonterra is looking at co-operative solutions for its Aussie farmers. Picture/NZ Herald.

Fonterra Australia said it is looking at formulating a "co-operative solution" for its Aussie suppliers, who at present work outside the co-op's structure.

Rene Dedoncker, who heads the co-op's Australian operation, said the Aussie business was becoming stronger as its product mix was rebalanced.

"Our plants, including our recently reopened Stanhope cheese plant, are operating efficiently," he said. Stanhope was closed in 2014 after a fire.

Dedoncker said the co-op was continuing to grow its Australian business and would soon announce investments that will increase processing capacity by 500 million litres.
"We're also exploring ways that we can work more closely with our suppliers, including whether there is a co-operative solution for our Australian suppliers," he said.

Fonterra, at its results presentation last month, said it planned to invest $100 million expanding across the Tasman.

The co-op has lowered its forecast range for its Australian farmgate milk price at the close of the current season, but also raised the current price its farmers will be paid.

A rise of A10c a kilogram of milk solids will take the company's average farmgate milk price to A$5.62 a kilogram of milk solids, and the change will apply from July 1, 2017, and be paid on December 15.

With the additional A40c per kg of milk solids announced by Fonterra Australia in May, farmers will be paid an average of A$6.02 per kilogram.

The company has also trimmed its forecast average milk price closing range to $5.62 to $5.70/kg, reflecting some softening in the global market.

"We remain committed to providing our farmers with clear market-based signals, and the 10c reduction in the top end of our forecast range is a prudent way to reflect the impact of this global volatility on the market farmgate milk price," Dedoncker said.

"However, demand for dairy remains strong in key regions, and we are confident with our increased farmgate milk price in the current conditions," he said.