Fon­terra on track to be big­gest milk pro­ces­sor

Tasmanian Country - - NEWS -

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.

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