Fonterra's help for US infant formula crisis not on formal agenda for trade mission

Fonterra to join US trade delegation, led by PM Jacinda Ardern. Photo / File

Fonterra says it is continuing to look at how it can help relieve the US infant formula shortage crisis but any discussions on this as it joins the Prime Minister-led trade delegation to the US look likely to be impromptu.

New Zealand's dairy industry leader will be represented on this week's delegation by Mike Cronin, managing director co-operative affairs, but the company said while it wants to assist with the infant formula shortage, no meetings to specifically discuss this are scheduled.

US president Joe Biden has authorised the military to fly in emergency infant formula supplies from Europe after a fatal food safety scare closed formula manufacturer Abbott - one of four companies which control 90 per cent of the US market after years of consolidation.

Fonterra is a supplier of base ingredients to US infant formula manufacturers and has said it is in close contact with customers and partners to help them with the supply gap from an ingredients perspective. It had sent ingredients by airfreight to assist.

Fonterra produces finished infant formula for sale in New Zealand and in some export markets. But the US is not one of them. New Zealand's biggest company and the world's largest dairy exporter said this was because the US has market barriers in place that prevent this country's exporters from registering to supply finished formula to the US market.

Fonterra said it was reviewing the US Food and Drug Administration's updated infant formula guidance to assess whether it opened an access supply opportunity.

Meanwhile, on its part in the delegation, the company said the US was an important market, particularly in terms of its value-add strategy.

"We have a number of sourcing, IP and investment partnerships in the US to support this strategy, and we are a leading supplier to active living customers there," Simon Tucker, director global sustainability, stakeholder affairs and trade, told the Herald.

Fonterra's provenance and sustainability credentials resonated with US customers and consumers, he said.

The delegation will visit the Langer Laboratory at the Massachusetts Institute of Technology, home of Fonterra's VitaKey partner in Boston.

VitaKey is a leader in innovative dairy nutrition. Delegates, led by agriculture and trade minister Damien O'Connor, will meet VitaKey co-founder and globally eminent bio-scientist Dr Robert Langer.

Tucker said Fonterra had more than 10 partnerships in the US, including with Motif FoodWorks and Land O'Lakes.

Its US activities are part of Fonterra's Amena business, which covers Africa, the Middle East, Europe, North Asia and the Americas.

US earnings are not broken out in Fonterra's 2021 annual report, which showed Amena had FY21 revenue of $7.3 billion, down 7 per cent on FY20, and ebit of $336 million.

Fonterra's total group revenue in FY21 was $20.9b, with reported net profit after tax of $599m.

The trade mission to the US, led by PM Jacinda Ardern, left last night.

Ardern said she would take the simple messages that New Zealand was open for business and recreation.

As the US opened up after the pandemic she wanted to make sure New Zealand was at the forefront of their minds. The US is New Zealand's third-largest market.