Fonterra today announced that it had taken options on land for a planned new milk processing plant in central Canterbury, which it expects to be operating in September 2012 reports farmonline. Fonterra’s Managing Director Trade and Operations, Gary Romano, said the development would be among the largest investments in manufacturing in NZ in the past five years and would cater for strong milk growth in the area in the future.

Fonterra says it will start talking with its farmer shareholders next week on the next stage of its proposed capital restructuring, which would allow farmers to trade co-op shares among themselves reports The NZ Herald. “The Fonterra Board and Shareholders’ Council have voted to support the concept of Trading Among Farmers and agreed that it should go out for consultation,” says a press release just issued.

Feedback from this process will be taken into account before any final plan is put to a farmer vote. Any proposal would require 75 per cent support of farmer shareholders voting. The new scheme would allow farmers to buy or sell their Fonterra shares among themselves, instead of purchasing or redeeming them through the co-op. The co-op will remain 100 per cent farmer owned and controlled.

(more…)

NZX will be pipped at the post in launching dairy derivatives by Chicago-based CME, the world’s largest futures exchange, which announced today it will begin trading international skimmed milk powder futures and options contracts from May 9, a month ahead of NZX’s plans to launch similar products reports Stuff.

NZX this month announced a timetable for roll-out of various dairy derivatives, starting with whole milk powder futures in June, skim milk powder futures and anhydrous milk fat futures in September, and options on dairy futures from 2011.Fonterra has laid the groundwork for New Zealand-led global dairy derivatives through the successful creation of its globalDairytrade auction platform.

(more…)

NZ hasn’t just lost its place as the world’s lowest cost dairy producer, our costs are now on a par with Ireland, a multi-national farmer with a foot in both camps told last week’s Large Herds Conference. Clinton has 1450ha and 2500 cows in Southland, plus dairy farm investments in the US and his home country, Ireland. Increased land values and a massive debt burden are key factors reports Rural News. NZ’s farmers need to recognise the problem and stop unnecessary spending, he says.

Some farmers have backed away from the day to day running “maybe a bit too much. There’s a case for a bit more personal involvement… The further you are away from milking the cows, the more it costs.”Banks should offer the lowest possible rate. Farmers are the best possible business they can get and they should be doing it as cheaply as possible. They may not get a huge margin but there are very few defaults.”

(more…)

Sales have slumped by more than a quarter of a billion dollars but dairy giant Fonterra says life is looking brighter as it slashes debt. Revenue for the six months ending January 31 was $7.7 billion, down from $8 billion the previous year. Chief executive Andrew Ferrier said there had been volatility in international prices and exchange rates during the period reports The NZ Herald.

However, lower average selling prices that wiped more than $1.6 billion off revenue had been largely offset by increased sales volumes worth $1 billion and a positive impact from net foreign exchange worth $300 million, Ferrier said. Customer demand had increased during the period as consumer confidence improved, he said. “Although there is an element of uncertainty as to how supply and demand factors will influence prices, the recent stability means the outlook is positive for the balance of this year and into 2010/11.”

(more…)

Dairy industry leaders have put farmers on notice to lift their game after a damning report showed many have substandard effluent management systems. Fonterra announced yesterday that from next season it will visit every supplier’s farm each year to inspect dairy-effluent systems. The company has demanded higher compliance with the regulations, with threatening fines and the refusal to collect milk from repeat offenders reports The ODT.

The latest Clean Streams Accord data, gathered by regional councils, shows the number of farmers around New Zealand adhering to council dairy-effluent discharge consents has slipped from 64% in 2007-08 to 60% in 2008-09. “That’s a level that whilst we do not like it, you have got to say it’s not a bad level. It’s one of the best in the country.”

(more…)

Booming South Island milk production will prop up Fonterra’s national collection this year as the North Island wilts from lack of rain in the season’s home straight reports Business Day. The giant global dairy exporter, which collects 92 per cent of the country’s milk and earns 25 per cent of NZ’s export returns, said with the end of the 2009-10 season approaching, South Island milk production was 9 per cent up on last season, while the North Island was 1 per cent behind.

Overall, Fonterra suppliers’ national milk production is currently around 2 per cent ahead of last year’s 1.3 billion litres, said Fonterra general manager, milk supply, Tim Deane. But for some North Island dairy farmers hoping to use Fonterra’s projected $6-plus/kg milksolids payout this season to recover from previous drought and last year’s recession-squeezed payout, that overall 1 per cent North Island dip skates over some ugly figures.

(more…)

Fonterra wants other large dairy companies to join its website auction for milk powder reports The Manawatu Standard. The co-operative is now selling about 20 per cent of the milk powder it produces on globalDairyTrade, but it wants to expand the web-selling mechanism. The trade manager of globalDairyTrade, Paul Grave, said web sales were a tool to manage global uncertainty over dairy prices.

“In forward sales, someone wins and someone loses. If a customer loses, they are not happy and Fonterra doesn’t want an unhappy customer. If Fonterra loses, our shareholders aren’t happy.” The price of milk powder used to change by a few hundred United States dollars a month, but now it can be US$600, Mr Grave said. “We can’t live with those fluctuations.”

(more…)

Fonterra says it has lifted its “distributable profit” forecast by 5c for the current 2009-2010 season to between 40c to 50c a share – but doesn’t plan to pass on the extra earnings to its 10,500 farmers. Distributable profit is the total surplus from Fonterra’s business available for distribution to farmer shareholders by way of dividend, and was previously estimated last December at 35c to 45c a share.

The company said today it was making no change to the “target dividend range” of 20c to 30c a share. “This would indicate 10c to 30c a share…will be retained,” it said. The forecast milk price of $5.70/kg milksolids for the season is also unchanged .

(more…)

The world’s largest milk-powder dryer, costing $212 million, was opened  at Edendale in Southland as part of Fonterra’s strengthening of infrastructure, with more South Island developments to follow. Fonterra has a rolling plan to upgrade its plants and warehouses, and the milk-powder dryer, ED4, capable of producing 27 tonnes of milk powder an hour, will increase Fonterra’s national production by more than 10 per cent to 1.1 million tonnes a year.

The Edendale dryer coincides with dairying growth in the South Island of between 6 per cent and 7 per cent over the past year. Fonterra trade and operations managing director Gary Romano said the South Island represented one-third of Fonterra’s milk manufacturing reports Stuff.

(more…)