Friday, March 29, 2024

Livestock first step in Fonterra review

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The sale of Farm Source livestock division to Carrfields Group is the first confirmed move in Fonterra’s portfolio review, begun after the trading loss for the 2018 financial year was revealed.
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The livestock division had produced positive returns since inception in 2005 as part of RD1, the Farm Source predecessor.

But the investment needed to maintain and grow the division would be more effectively targeted towards core Farm Source activities, stores director Richard Allen said.

The decision to sell for an undisclosed price was also made in the context of the larger review of Fonterra’s assets and investments, he said.

A former employee said the sale price would not have been large because turnover had been relatively small, based on transactions of about 200,000 head of cattle annually and 25 livestock agents.

The division was based around respected national livestock manager Trevor Hancock and established to source dairy cows in the North Island for the big South Island dairy expansion.

Fonterra’s China Farms also required large numbers of New Zealand heifers.

Both of those reasons had now diminished, and the portfolio review had given impetus to the sale of the division, the source said.

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