Fonterra Faces Pressure Over Declining Milk Supply
Source: DairyNews.today
Fonterra, New Zealand’s largest dairy co-operative, is under pressure from its farmers to address a decline in its share of the nation’s milk supply. The issue, flagged as a critical performance measure by Fonterra's Co-operative Council, fell short of its 2024 target, raising concerns among stakeholders.
Milk Collection Share Falls Below Target
At the co-operative’s annual meeting in New Plymouth, Co-operative Council Chair John Stevenson noted that Fonterra’s share of New Zealand’s milk collection dropped to 78.1%, below the council's target of 79%. Stevenson described the decline as a point of concern for the council and members.
Farmers echoed these concerns during the meeting, with questions raised about whether Fonterra’s policies on milk retention might be too restrictive compared to competing companies.
“There needs to be urgency in retaining milk,” one farmer commented, pointing to Synlait as an example of proactive strategies in the sector.
Leadership Responds
Fonterra CEO Miles Hurrell acknowledged the challenge and emphasized the need for regulatory and strategic adjustments. Hurrell pointed to the Dairy Industry Restructuring Act (DIRA), which established the framework for Fonterra but has also introduced market pressures.
“We believe there’s a conversation that needs to happen in Wellington about whether DIRA has run its course,” Hurrell said, adding that legislative changes might be necessary to ensure a competitive edge for the co-operative.
Hurrell stressed that farmers ultimately have the right to choose where to supply their milk but expressed hope that Fonterra’s recent performance and strategy would provide compelling reasons to stay.
Industry-Wide Concerns
Some farmers called for government intervention to support the wider dairy industry, which has faced challenges in maintaining growth. Hurrell agreed that collaboration with policymakers could align with government goals to double exports by 2035 but emphasized that the industry must demonstrate responsible and strategic action to merit such support.
“You can achieve export growth by diversifying into alternative industries, but there’s no better sector to back than dairy,” Hurrell said, urging the government to consider supporting its most significant export driver.
As Fonterra grapples with declining supply and increasing competition, the co-operative’s leadership is under mounting pressure to implement measures that retain farmer loyalty and sustain New Zealand’s dominant position in the global dairy market. Conversations with policymakers and internal strategy refinements will likely shape Fonterra’s path forward.
At the co-operative’s annual meeting in New Plymouth, Co-operative Council Chair John Stevenson noted that Fonterra’s share of New Zealand’s milk collection dropped to 78.1%, below the council's target of 79%. Stevenson described the decline as a point of concern for the council and members.
Farmers echoed these concerns during the meeting, with questions raised about whether Fonterra’s policies on milk retention might be too restrictive compared to competing companies.
“There needs to be urgency in retaining milk,” one farmer commented, pointing to Synlait as an example of proactive strategies in the sector.
Leadership Responds
Fonterra CEO Miles Hurrell acknowledged the challenge and emphasized the need for regulatory and strategic adjustments. Hurrell pointed to the Dairy Industry Restructuring Act (DIRA), which established the framework for Fonterra but has also introduced market pressures.
“We believe there’s a conversation that needs to happen in Wellington about whether DIRA has run its course,” Hurrell said, adding that legislative changes might be necessary to ensure a competitive edge for the co-operative.
Hurrell stressed that farmers ultimately have the right to choose where to supply their milk but expressed hope that Fonterra’s recent performance and strategy would provide compelling reasons to stay.
Industry-Wide Concerns
Some farmers called for government intervention to support the wider dairy industry, which has faced challenges in maintaining growth. Hurrell agreed that collaboration with policymakers could align with government goals to double exports by 2035 but emphasized that the industry must demonstrate responsible and strategic action to merit such support.
“You can achieve export growth by diversifying into alternative industries, but there’s no better sector to back than dairy,” Hurrell said, urging the government to consider supporting its most significant export driver.
As Fonterra grapples with declining supply and increasing competition, the co-operative’s leadership is under mounting pressure to implement measures that retain farmer loyalty and sustain New Zealand’s dominant position in the global dairy market. Conversations with policymakers and internal strategy refinements will likely shape Fonterra’s path forward.
