Fonterra has to lift its game, says upbeat Spierings

COLLETTE DEVLIN
Last updated 05:00 28/11/2013

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Dairy

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The 2013-14 financial year will be one to remember for Fonterra with a record payout, chief executive Theo Spierings told shareholders at the dairy giant's annual meeting in Southland yesterday.

However, Fonterra had made mistakes during a challenging 2013 and needed to lift its game.

An optimistic Spierings told the meeting in Edendale he expected it would be an "outstanding year" for the corporation, farmers and shareholders.

He estimated 2.5 to 3 per cent growth.

The forecast cash payout for 2013-14 has been worked out as a farmgate milk price of $8.30 per kilogram of milksolids, with an estimated dividend of 32 cents per share, to give farmers a record payout of $8.62.

Speaking about the botulism scare which hit the co-op earlier this year, Spierings said Fonterra was now in rebuild mode and in a good space with local authorities and customers.

He said Fonterra was not walking away from the event and had to lift its game in food supply quality and sustainability.

Farmers wanted to see Fonterra learn from the scare, translate this into actions and come out stronger, he said.

His promise to farmers was that Fonterra would learn and lift its standards.

Fonterra chairman John Wilson also spoke about the safety scare and recall: "Our systems let us down. We learned a lesson from a difficult experience."

Spierings said there were areas Fonterra "must do better" and work was under way.

"Going forward, when we want to grow dairy, we will need to do it in a sustainable way." This was not just "on farm" but included factory and logistics.

Fonterra wanted to look forwards and had a 10-year growth plan, which it had presented to the Government.

Southland, one of the four pillars of the New Zealand dairy sector, was still growing in farm conversions and cow numbers.

However, the game had to shift from just adding animals and become more sustainable, he said.

Southland farmers were looking for solutions in sustainability, environment and winter milk.

"But there are definitely issues they still want to discuss with us."

With regard to sustainability solutions, it would not be a one size fits all - Fonterra would look at each farm individually, he said.

Sustainability in the entire supply chain was the key to securing further international growth and Fonterra now had a strategic plan for this.

Spierings spoke about Parliamentary Commissioner Dr Jan Wright's Water quality in New Zealand report released last week.

He said the report was "in the past and looking backwards".

It looked at samples and situations which Fonterra had already said a few years ago were not good enough and had started to fence waterways.

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But last week Dr Wright said the report, based on satellite images from 2008, included current best practices.

Spierings said Fonterra farmers had now fenced 20,400 kilometres of waterways - about 90 per cent.

The final 10 per cent, mostly in hilly terrain, would be done because such fencing was part of the Fonterra supply contract.

He said Fonterra would consider doing its own scientific water research project.

- Fairfax Media

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