Miles Hurrell: Looking beyond the current challenges, Fonterra is optimistic about the industry's future
Source: The DairyNews
Miles Hurrell, the CEO of Fonterra, underscores the importance of playing to strengths amidst potential volatility in the dairy industry. The Global Dairy Trade's steady improvement in prices provides relief to New Zealand's dairy farmers, but challenges loom with geopolitical tensions and global economic shifts, as highlighted in Rabobank's annual outlook.
Fonterra closely monitors disruptions in shipping lines, particularly in the Red Sea, caused by Houthi attacks, leading to shipping detours and potential delays into the second half of the year. Hurrell emphasizes the significance of controlling controllables and leveraging strengths in navigating these uncertainties.
The Kotahi joint venture with Silver Fern Farms, established over a decade ago, ensures Fonterra's resilience in transporting milk to markets. The company's scale and optionality allow it to optimize its supply chain, providing security to farmers during turbulent times.
Last year, Fonterra achieved a remarkable return on capital of 12.4%, with a forecasted FY24 earnings range of 50-65 cents per share. The co-operative's profitability contributes to regional New Zealand, as farmers reinvest almost 50 cents of every earned dollar in their local communities.
Hurrell emphasizes the importance of economies of scale and efficient operations in supporting Fonterra's farmgate milk price, benefiting from increased demand from the Middle East and Southeast Asia. The company explores tools and solutions, such as advance rate schedules and fixed milk price options, to assist farmers with cash flow and certainty.
Looking beyond the current challenges, Fonterra is optimistic about the industry's future, driven by growing global demand for dairy. The co-operative aims to expand its share of sustainable New Zealand milk, aided by a flexible shareholding capital structure that welcomes new farmers.
Strengthening partnerships with multinational companies and focusing on innovation across various channels, Fonterra differentiates itself through a reputation for lower-emission, safe, and high-quality dairy. The co-operative's commitment to sustainability aligns with evolving customer needs.
Ultimately, Fonterra's unique point of difference lies in its co-operative structure, fostering strength and resilience. Hurrell emphasizes the co-operative's legacy and its role in providing security for generations to come, ensuring farmers can focus on what they do best.
As Michael Phillips from Waka Dairies in Dannevirke puts it, "We currently have a competitive edge because of what we do on the farm and because of what Fonterra does above and beyond that."
The Kotahi joint venture with Silver Fern Farms, established over a decade ago, ensures Fonterra's resilience in transporting milk to markets. The company's scale and optionality allow it to optimize its supply chain, providing security to farmers during turbulent times.
Last year, Fonterra achieved a remarkable return on capital of 12.4%, with a forecasted FY24 earnings range of 50-65 cents per share. The co-operative's profitability contributes to regional New Zealand, as farmers reinvest almost 50 cents of every earned dollar in their local communities.
Hurrell emphasizes the importance of economies of scale and efficient operations in supporting Fonterra's farmgate milk price, benefiting from increased demand from the Middle East and Southeast Asia. The company explores tools and solutions, such as advance rate schedules and fixed milk price options, to assist farmers with cash flow and certainty.
Looking beyond the current challenges, Fonterra is optimistic about the industry's future, driven by growing global demand for dairy. The co-operative aims to expand its share of sustainable New Zealand milk, aided by a flexible shareholding capital structure that welcomes new farmers.
Strengthening partnerships with multinational companies and focusing on innovation across various channels, Fonterra differentiates itself through a reputation for lower-emission, safe, and high-quality dairy. The co-operative's commitment to sustainability aligns with evolving customer needs.
Ultimately, Fonterra's unique point of difference lies in its co-operative structure, fostering strength and resilience. Hurrell emphasizes the co-operative's legacy and its role in providing security for generations to come, ensuring farmers can focus on what they do best.
As Michael Phillips from Waka Dairies in Dannevirke puts it, "We currently have a competitive edge because of what we do on the farm and because of what Fonterra does above and beyond that."
