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Asia Pacific: Fonterra opens milk sourcing subsidiary

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Fonterra has launched a milk sourcing subsidiary to grow market share in its New Zealand (NZ) milk pool, and provide a new pathway to membership in the Co-operative.

Called mymilk, it will initially invite applications, from farms in the Canterbury, Otago and Southland regions that are not currently supplying Fonterra, for one year contracts, renewable for a maximum of five years, without the obligation to purchase Fonterra shares.

At any time mymilk suppliers can apply to join the Co-operative, purchase shares and supply Fonterra directly.

“Providing a different pathway of supply through mymilk to farms not currently supplying Fonterra enables farmers to ultimately weigh in behind the co-operative model,” says chairman John Wilson.

“Every additional kilogram of milksolids will generate improved cost synergies and we currently have large scale, efficient plants in the South Island with spare capacity.”

He added it was important in an increasingly competitive milk sourcing environment that farmers could support Fonterra and then apply to become shareholders in the wholly owned New Zealand Co-operative in time.

“Taking a flexible approach supports our Co-operative’s strength and ambition to grow. We stand firmly by the co-operative principle that supply should be backed by shares which is why mymilk volumes will be limited to five per cent of Fonterra’s total volumes. Contracts will also be limited to five years in total and will only be available to farms that don’t currently supply Fonterra.”

“It is also important that we protect the future of our industry and allow farmers to grow. We do not want a fragmented industry, as this would not be good for NZ dairy farmers and not good for the country.”