Fonterra reviews milk ownership in Aust, sells ice cream
May 4th, 2009
Fonterra has embarked on a review of its regional liquid milk assets in Aust as it focuses on national sales of cheeses, spreads, yoghurts and dairy desserts. The co-operative has reassured dairy farmers in Western Aust – where it collects 130m litres of milk a year – supply arrangements won’t be affected. Western Aust has been at the heart of Fonterra’s ice cream production across the Tasman. The company has now agreed to sell its Peters and Connoisseur brands to Nestle and will sell its license to manufacture and market the Cadbury ice cream range in Aust to Regal Cream Products, a unit of Bulla Dairy Foods. Nestle already owns the Peters brand in all other Aust states.
Meanwhile in NZ, dairy farmers are breathing a sigh of relief after Fonterra raised this season’s forecast milk fat payment by 10 cents to $5.20 a kg. Some had feared prices were set to tumble, with the 2010 payment “having a $3 in front of it.” Chairman Henry van der Heyden says there have been “some encouraging signs of more stability” in dairy markets in recent months.
The co-operative has been helped in raising the payment by the $630m of milk powder sales to China. Farmers will get to see the increase in June, when the advance rate is to be paid. This will give them some cash flow certainty in the coming months as costs mount and they’re forced to discuss financial arrangements with their banks.
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