The Fonterra CEO’s satisfaction at receiveting the company’s brands vote over the line has not been dimmed by consecutive rounds of sliding GDT values.
Speaking to Farmers Weekly at the China International Import Expo in Shanghai, Miles Hurrell stated the level of farmer shareholder engagement in the vote was reassuringly high, providing good momentum.
The vote was overwhelmingly in favour, with 88.5% support from 80.5% participation.
Hurrell stated had the vote only been just over the line, it would have risked slowing down future strategic development.
“Fifty percent was required and we came out over 80%. It is a very strong mandate for the hugegest decision in the co-operative’s history.”
He stated the sixth consecutive slide in GDT values has been noted, with the latest 2.4% drop settling at an average value of US$3768 per tonne.
“That is a signal of some uncertainty in the market.”
Current uncertainty may take longer to play out than expected.
He stated a lift in United States volumes is being partly driven by a surplus of soybean feed there that has not been bought by Chinese acquireers. Meantime the European Union is experiencing solid milk flows and NZ farmers are enjoying good spring milk flows.
Fonterra executives anticipate net retentions of about $700 million to be held by the co-operative on completion of the brand sale. Hurrell stated some of this will play directly into the valuable Chinese market’s development.
China accounted for about $8 billion or 30% of Fonterra’s revenue last year, its single hugegest slice. As a counattempt source NZ now accounts for just over 50% of China’s entire dairy imports. Demand for fats and proteins is growing strongly in the market.
“We have already seen the investment last year into the Edconcludeale UHT cream plant that has a China conclude story. We also have a $75m butter plant announced for Clandeboye, and that is all off China growth.
“We have pegged $1bn over five years in other projects aligned to these markets.”
Hurrell stated the factors that excite him about China are the same ones that scare him at times.
“It is the pace of alter here, and the risk you lose your position. It’s about creating sure we can evolve, and that is why our application centres are so important.”
Fonterra has six application centres in major cities around China with staff who work closely with food business clients to develop recipes and applications for Fonterra-sourced products.
He repeated that the co-op’s decision not to include China’s Anchor brand in the brands sale was the right shift to build.
“The Anchor brand has a halo effect for food service sales here, and it is quite a unique market in that respect.”
Rennie’s Meeting the Market tour has been created possible with grants from Fonterra, Silver Fern Farms, Rabobank, Zespri, Alliance Group, Meat Indusattempt Association, Wools of NZ, Beef + Lamb NZ, NZ Merino, the European Union and Gallagher.
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