Farm Ireland

Monday 23 April 2018

Farmer-owned co-op goes from strength to strength

Caitriona Murphy

Caitriona Murphy

Fonterra is a co-op owned by 11,000 New Zealand farmers and processes more than 90pc of the milk produced in New Zealand. It has grown to be the country's largest company and is now responsible for around 30pc of the world's dairy exports.

It was formed from a merger of the country's two largest co-operatives, New Zealand Dairy Group and Kiwi Co-operative Dairies, together with the New Zealand Dairy Board, which had been the marketing and export agent for all the co-operatives.

Each farmer has, on average, the equivalent of €300,000 of capital tied up with the co-op but only milking farmers are allowed to become shareholders of the co-op.

New Zealand's total milk production is 18bn litres a year, of which Fonterra deals with around 17bn litres.

The co-op processes more than 20bn litres of milk globally and supplies dairy ingredients to more than 100 different countries.

Fonterra owns leading dairy brands in Australia, New Zealand, Asia, the Middle East and Latin America.

Turnover in the past year exceeded €11.6bn, a new record for the company.

Farmers were this year paid $7.60/kg milk solids, equating to around 37.64c/l at typical New Zealand constituents of about 4.9pc fat and 3.7pc protein.

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The co-op employs 15,000 staff, including about 8,000 people in New Zealand and another 7,000 spread around the world.

The average farm size in New Zealand is 300ac and the average herd is 380 cows.

The dairy sector used to be concentrated solely in the North Island but now some 40pc of dairy production is located on the South Island and is growing six times faster than the North Island at a rate of 6pc a year. Farms on the South Island have an average of 480ac and 565 cows, producing 210,000kg of milk solids on average.

Average production growth across all of New Zealand is expected to be about 3pc a year, based on a five to 10-year trend.

Caitriona Murphy

Indo Farming