Fonterra to invest $100m in Australia
Fonterra has unveiled plans to invest $100 million immediately into its Australian business in a major expansion plan.
It is also looking into the possibility of its Australian operation becoming a co-operative.
Chief executive Theo Spierings told the co-operative’s annual general meeting in Hawera last Thursday that Fonterra’s reputation had climbed from ninth to fifth in the RepZ survey and had ‘‘changed the minds of 1.5 million New Zealanders.’’
The dairy giant launched a charm offensive last year, using charismatic leaders such as Richie McCaw to promote its work.
Over the past year Fonterra has become the largest milk collector in Australia as major competitor Murray Goulbourn (MG) has faltered. Last week Canadian company Saputo announced it would buy MG for $1.46 billion. Fonterra’s offer to create a super co-operative was spurned and it is not clear yet whether it will make a counter offer.
Spierings said Fonterra Australia had reached full milk processing capacity at two billion litres a year and would invest an initial $100m immediately to provide a further 500 million litres of capacity. It projected taking three billion litres a year in the near future, based on a growing demand for cheese and nutritional products such as infant formula.
By contrast New Zealand farmers supplied 21,196 billion litres to the co-op last year.
It would evaluate the opportunity of introducing the coop model. Australian dairy farmers have been unhappy with their treatment at the hands of Fonterra, following the poor 2015-16 payout, and there have been calls for it to become a co-op.
Spierings’ comments recently that Fonterra was taking cash out of Australia to give back to its New Zealand shareholders did not go down well across the Tasman. A Fonterra spokesman said its growth predictions were unchanged following its failure to buy MG.
Spierings outlined a vision for Fonterra based on a ‘‘velocity’’ strategy, which in five years would become an ‘‘innovative co-op’’ and after 10 years it would be a ‘‘sustainable co-op’’.