Fonterra to slash more jobs
However, a ‘‘significant increase’’ in volatility in global dairy markets meant the co-operative needed to change, Leyland said.
Because of Fonterra’s size and importance to the New Zealand dairy industry, it needed a structure that allowed it ‘‘to cope with this [volatility] better than any other company’’, she said.
Fonterra chief executive Theo Spierings has previously said that the changes are aimed at making the business more agile.
They would include the beefing up of procurement, business operations and working capital, where the co-operative could ‘‘unlock increased value’’ for its more than 10,500 farmer owners.
The Waikato president of Federated Farmers, Chris Lewis, said most farmers were supportive of Fonterra taking a look at its costs, but he said they did not enjoy seeing jobs cuts in their own communities.
Their major concern was whether the co-operative would replace cut staff with contractors, as ‘‘that’s not savings’’.
The latest announcement also said the savings generated through the business review had allowed the co-operative to ‘‘support farmers during challenging market conditions’’.
Fonterra has a $430m support package in the form of interest-free loans to farmers after cutting its payout forecast to $3.85 per kilogram of milksolids for the current season.
The loan would be repayable once the payout climbed above $6, and remains interest free for two years. So far 6076 farmers have applied for a loan, 59 per cent of the co-operative’s shareholder base.
Lewis said farmers appreciated the help, and were feeling there was ‘‘a bit of hope on the horizon’’ after three price rises for milk sold on the GlobalDairyTrade auction.
Fonterra is due to report its annual result on Thursday, and loan applications close Friday.
The organisation would focus on embedding the new structure. The number of migrants coming to New Zealand has hit 60,000 for the first time, creating a risk that unemployment could head towards 7 per cent.
Yesterday Statistics New Zealand said that in August the number of long-term arrivals to New Zealand exceeded those leaving by 5470, raising annual net migration to 60,280, the highest number on record. While the largest source of migrants was from India (12,700), boosted by a relaxation of rules allowing visiting students to work, Statistics New Zealand’s figures showed the real driver was low migration to Australia.
In recent months the number of Kiwis moving home has just exceeded those leaving – by around 200 in August – the first time since 1991 that arrivals have exceeded departures across the Tasman since the early 1990s.
This marks a remarkable turnaround in migration flows.
While in Opposition John Key remarked that the numbers moving to Australia each year would fill Wellington’s Westpac Stadium. Labour later responded that under National the number moving across the Tasman hit a level which would fill Auckland’s Eden Park, New Zealand’s largest stadium.
Economists say while strong migration has helped protect New Zealand from labour shortages – in particular in helping staff the Canterbury rebuild – now that the economy is slowing arrivals are likely to stoke unemployment.
In July and August alone net migration added around 10,000 people of working age to the population. In the three months to June 30, the economy added around 7000 jobs according to Statistics New Zealand, well down on the rate jobs were being added in 2014.
‘‘We’re at that point where jobs