All Kiwis Benefit From the White Stuff

NEW ZEALAND - Record revenue is in sight for Kiwi dairy giant Fonterra as it edges towards ‘the four minute mile’ – breaking the NZ$20 billion barrier.

28 March 2014

2 minute read

Oceania

Should it be broken, it would be hailed as a watershed juncture for New Zealand’s economy and a ‘boost’ amid widespread North Island drought and lower results on recent GlobalDairyTrade auctions.

High expectations follow a bullish expansion programme seeing Fonterra explore emerging markets, push high value nutrition products and build foodservices.

The priorities stem from its V3 business strategy.

Other V3 initiatives include addressing input costs and selectively investing in milk pools to boost income from outside New Zealand.

In the last two weeks, company chairman John Wilson visited Fonterra’s new NZ$126 million Waitoa UHT plant and work has commenced on a West Java manufacturing plant to capture a predicted 5 per cent annual growth in Indonesian dairy consumption to 2020.

Aside from benefiting Fonterra and shareholders, expanding domestic and overseas activity has been welcomed for its trickle down effect on the national economy.

This follows a record NZ$8.75 kg MS forecast pay-out, worth NZ$13.8 billion to the New Zealand economy as a whole.

Of this, 50 cents in every dollar heads to local businesses straight from the farm bank account, revealed Fonterra’s Mr Wilson.

“Almost $7 billion dollars is spent locally by Fonterra supplier-shareholders, so it’s like a shot of adrenalin into the bloodstream of our economy, the provinces,” said Federated Farmers Dairy Chairperson Willy Leferink this week.

“We also know that with every dollar in the payout farmer’s receive, it puts NZ$300 into the back pocket of every man, woman and child.

“If we include the dividend, a forecast NZ$8.75 per kilogram of milksolids means we are talking thousands of dollars," he added.

Further to fiscal benefits at home, Fonterra has launched a knowledge sharing partnership with leaders across many facets of China’s dairy sector.

The joint partnership features an annual China-NZ forum to facilitate researcher collaboration and will focus on developing industry policy and technology.

Wang Yuchan, Chinese government dairy scientist said the cooperation would allow more embryonic facilities to capitalise on a wealth of New Zealand expertise.

Help is to be directed at local farms and processors through the ‘Golden Key’ training programme, providing personnel with training and facilities.

Assessing the impact of the initiative this week, Mr Yuchan said: "This will help us to promote the sustainable development of dairy in both New Zealand and China.”