Sunday, December 3, 2023

Farmers see authentic strategy

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Fonterra’s farmers have decried the bad results of 2019 while approving the transparency and logic of the strategy reset, co-operative affairs managing director Mike Cronin says.
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Speaking after three of the shareholder roadshow meetings in the South Island he said farmers welcomed the new strategy as authentic and self-explanatory and, therefore, convincing.

“Some want more detail on how we got here but the overall impression is that the strategy is back to basics, co-operative, New Zealand milk and all those good things.”

While they understood them, perhaps farmers never felt attached to the previous strategies but they certainly resonated with the new, Cronin said.

As to how they might respond in practical ways they need to keep doing what they do well and relate to the company through Farm Source and the Co-operative Difference.

Some technical changes such as milk vat cooling and telemetry are under way and farmers should continue to monitor the fat evaluation index and meet all their food safety obligations.

The Co-op Difference will continue to recognise those farmers who go above and beyond but it also aims to keep the milk supply and quality platform solid.

The Honour Roll publication of suppliers’ names for milk quality excellence was well received, he said.

Worth about 10c/kg milksolids to farmers who participated, Farm Source benefits totalled $41 million last season, including $11m of Farm Source dollar rewards, $18m of discounts and $9m of partnership benefits.

Fonterra has said milk production is up about 2% on last season but regular cold snaps mean soil temperatures have not yet risen, leading to stop-start grass growth and a slight slowing in the build-up to peak spring collection.

A further 1000 farm environment plans are targeted this season, to lift the number of farms from 23% to 32% of Fonterra’s total, on the way to full coverage by 2025.

“These are quality plans done by qualified advisers and not just a box-ticking exercise.

“Whatever the standards that central government or regional government set, we think our approach will qualify and avoid duplication in the future.”

Cronin said the fixed milk price scheme covered 800 participating farmers after four months of opportunities, two last season and two so far this season.

“These are by and large medium-sized farms of less than 200,000kg milksolids and the last two offerings have been over-subscribed so we think FMP is meeting a need.”

MyMilk continues to do what it was designed to do – bring in new suppliers in the South Island.

Participation is 115 farms expected to deliver about 30m kg milksolids this season, up from 26m last season.

The number of farms that have converted fully to Fonterra, completely shared up, is 13, delivering 3.3m kg.

Cronin said a key objective of the new strategy is to retain milk market share for Fonterra and he believes the trust and confidence rebuild for farmers will achieve that.

“Efficiency is a big component of the strategy, to keep plants full of milk and ensure product optionality.

“Even though the milk price is good, farmers face challenging times with climate change, low industry reputation, environmental compliance and so the co-operative aims to have a package and help where we can.”

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