Farmers get Fonterra's take on future
Fonterra bosses have met with Southland dairy farmers to discuss the co-operative's 2014 interim results and to look to future market strategies.
One of 45 meetings Fonterra is holding throughout the country, chairman John Wilson said it was a good chance to give farmers a better understanding of the factors that would affect their businesses.
"It's a chance to talk to farmers and to discuss strategy because if we make the right decisions now, in five to 10 years' time we'll still be strong."
The high volatility that had driven record demand for milk powders meant the past six months had been a period of mixed fortunes for the co- operative, farmers were told.
The increasing volatility of commodity prices was expected to be ongoing, along with the challenge of fluctuations in international milk supply and demand.
However, the outlook for dairy remained strong, and the business had plans in place to profit from the continued rise in global dairy demand.
Southland was an important region for the co-operative, Wilson said, and Fonterra needed to ensure its farmers could confidently increase supply.
Fonterra was staying on strategy with its focus on value-add products, and positioning for the future with food service and consumer volumes showing strong growth in key markets like Asia.
Chief executive Theo Spierings told farmers Fonterra would also fast-track its capital investment plans to improve its production capacity and flexibility.
"This will result in additional capital expenditure of $400 million to $500m over the next three to four years."
This would provide greater opportunities to take advantage of relative market prices, additional capacity and the ability to take higher volumes from existing and new suppliers.
However, it was unlikely any of the capital investment would be seen in Southland, Wilson said.
"There's already been significant investment at Edendale. However, if new milk supply continues to grow, then of course there'll be more investment."
As for the future, New Zealand's clean green image and sustainable farming practices were essential on the international stage.
"I'm absolutely confident Southland farmers will continue to adapt and our faming systems will evolve to meet those demands."
The Southland Times