“News that Fonterra is putting $555 million more into Edendale and Lichfield, on top of what’s going into Pahiatua and elsewhere, represents a huge vote of confidence in the dairy industry and the provinces.
“It’s going to be a great shot in the arm for jobs building this new capacity, let alone the 75 full-time jobs that will be generated plus many more downstream jobs that will flow from it.
“We’re more than pleased to see this investment ahead of this season’s peak milk, given last year’s buttermilk lakes represented a lost opportunity.
“It also shows how wrong it is to think that milk is a low-value export.
“That’s shown by Fonterra stepping up in China with a joint venture taking up to 20% in Beingmate, a leading Chinese producer of infant formula.
“Let’s say it has been a long time between drinks but it is right to get back on the horse.
“I feel Fonterra supplier-shareholders will back this investment of up to $615m.
“It shows just how international Fonterra’s global reach is, something many Kiwis don’t understand.
“Look at the joint venture with Beingmate.
“It will take what we produce in NZ along with paediatric products made at Darnum in Australia and whey specialty ingredients manufactured at Fonterra’s plant in the Netherlands.
“But this is just the start since NZ’s core competitive advantage and future lies in agribusiness,” Hoggard said.
And farmers would be breathing a huge sigh of relief with Fonterra’s benchmark forecast payout for 2014-15 being held at $6 a kilogram of milksolids.
“This is as far from milk and disaster as the moon is.
“While this season remains a super-trim one last season was definitely a silver-top one.
“The milk price hold is good news given there’s been widespread speculation about it sliding below the $6 mark, however, we’re not out of the woods yet.
“We still advise farmers to err on the side of caution by budgeting in the mid-$5 payout range,” Hoggard said.
Fonterra Shareholders’ Council chairman Ian Brown said the investments in NZ’s milk pools and a global partnership with China’s Beingmate were bold moves that would be welcomed by the co-operative’s farmers.
“There is a direct link between the $555m investment in the Lichfield and Edendale sites and the $615m investment in the partnership with Beingmate in that both align with the Fonterra strategy of increasing the volume and value of our milk.
“The investment in NZ operations is a real positive and will optimise the milk price we receive by enabling our co-op (to have) greater flexibility in deciding which products our milk goes into and when.
“The added employment opportunities in the construction phase and long-term within our factories will also prove to be a welcome cash injection for the local communities.”
Brown said the partnership with Beingmate was an important step to increasing access to the high-value Chinese nutritional powders market and, in doing so, generating greater profit and returns for Fonterra farmers.
“China is our number one market and demand for our products continues to grow there.
“Having recently visited the China market it’s difficult to overstate the importance of having a local presence and with Beingmate’s established networks and relationships this joint venture will enable us to move further towards consumer products that add margin over the value of milk.
“Today’s announcements provide our co-op the opportunity to extract maximum value from every drop of milk we produce through the best use of our global assets.”
Brown said farmers would be relieved with the milk price announcement but stressed the importance of continued prudent financial planning, particularly with the volatility in the market.
