Fonterra on track to be biggest milk processor
FONTERRA has intimated it could become Australia’s largest milk processor.
It revealed it has the capacity to handle 2.3 billion litres a year, but would keep it at 1.9-2 billion litres this season.
The revelation from Fonterra Australia managing director René Dedoncker on Friday coincided with a farmgate milk price step-up.
The rise, of 20cents per kilogram of milk solids, pushed the average weighted price for suppliers to $5.50/kgMS, the upper end of rival Murray Goulburn’s season forecast. There is also a 40c/kg/MS incentive on top of the Fonterra farmgate price.
Mr Dedoncker said Fonterra processed 1.5 billion litres in 2015-2016 and was on track for 2 billion litres.
Fonterra says 3 to 4 per cent of its milk growth would come from existing suppliers.
Last month, MG confirmed its milk intake would now be 2.3 billion litres, 34 per cent down from 2015-2016 levels.
It is understood more farmers are expected to leave MG this month. Fonterra confirmed it expected new suppliers to join.
For the first time, Fonterra is in the box seat and could process more milk than MG.
Mr Dedoncker said Fonterra could handle the extra milk, with the exception of two weeks at its Wynyard plant in Tasmania. The additional peak milk would be balanced across its Wynyard and Spreyton sites, with Spreyton to fill a new order for 1000 tonnes into Thailand.
“What we don’t want is unnecessary risk, we don’t want milk for the sake of milk.
“We’ve always said 1.9 to 2 (billion) gives us the right balance . . . we talk 2.2 to 2.3 but that introduces risk because we haven’t run facilities at that. A year into creating confidence, the last thing they [farmers] need is distraction and challenge.”
He said milk certainty had helped deliver the step-up but warned the rising Australian currency could affect the forecast price of up to $5.80kg/MS excluding the incentive.