In a written preview for the Farm Source magazine of the big strategy reveal in September, Monaghan said the operating model and capital structure will be addressed next.
Farmers will be consulted by directors and senior executive team members in a round of meetings following the annual results.
“The last pieces of the puzzle are our operating model and capital structure.
“We have been keeping one eye on our future capital needs as the strategy has been developed and already have a small team of people looking at our options.
“The work will ramp up once our strategy is finalised and we’ll be out talking to farmers on capital structure in September.
“It is critical to the future of our co-operative that we get our capital structure right.
“It will be a key priority and opportunity for us through to the end of the year and into 2020.”
Monaghan said there will be no big surprises in the strategy reveal because the best strategies are often the simplest.
He recaps the portfolio moves in the drive to get $800 million of debt repaid.
But he does not promise the target will be reached in September, only that more asset sales are likely.
Sustainability is now at the heart of everything the company does.
It has launched the Co-operative Difference to recognise farmers and milk quality and made a number of commitments to tackle climate change.
While they were the right things to do, they also recognise more value will be earned from milk produced with ethical and sustainable practices.
More value will also be earned from products backed by Fonterra’s unique heritage and provenance.
Monaghan re-emphasised the first big decision in the portfolio review – to drop the volume ambition of 30 billion litres by 2025.
“Growth of 35% in five years would have required investment in overseas milk pools and the people, infrastructure and operating costs that come with them,” he said.
“With that driver gone we are prioritising New Zealand milk and only looking to our global sources where they are needed to complement our NZ supply.”
Premium quality will be emphasised right through the supply chain, starting on-farm and flowing through to a simplified portfolio of premium products to sell to premium customers.
The portfolio will include core ingredients, advanced ingredients, consumer-ready products and food service products.
“A simplified portfolio means focusing on the markets and prioritising the products we already do best – that includes proteins, powders, cheese and butters.”
Fonterra has the best milk in the world for which people will pay a premium, he said.
It makes high-quality ingredients at a consistency, scale and efficiency that is hard to match.
Its employees are world leaders in dairy innovation and know-how and the company’s intellectual property has real value.
