Fonterra seeks to float farmer fund

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FONTERRA may establish a fund to source equity from investors for its farmers in Australia and New Zealand as part of a drive to boost the dairy giant’s milk pool to 30 billion litres from 22 billion litres by 2025.

The world’s biggest dairy exporter on Monday said it plans to begin consultations on the Equity Partners’ Fund as part of the launch of Fonterra’s fifth global brand, Farm Source.

Farm Source encompasses retail service, financial support, rewards and technology and will kick off in New Zealand before being rolled out in other countries.

In New Zealand, Fonterra’s 67 RD1 stores will be rebranded Farm Source and farmers will receive a rewards card that can accrue Farm Source Dollars and offers discounts on items such as fuel, cars, tyres and mobile and internet.

Fonterra chief executive Theo Spierings said the program is about encouraging farmers to grow milk supply.

«Farm Source is an enabler for Fonterra’s volume and value strategy because it is all about the milk. By supporting farmers to succeed and grow, the co-operative will also grow its milk pool in New Zealand which is core to the business,» Mr Spierings said.

«We want to access a 30 billion litre global milk pool by 2025. Farm Source starts here in New Zealand. We will also look to adopt it in other markets where we are growing our milk pools, tailoring it for those local markets.»
Fonterra is also the second biggest dairy processor in Australia, collecting about 1.5 billion litres of milk from ­Australian farmers every year.
 

Australia’s production static

 
Milk production in Australia has been relatively static for the past decade, fluctuating around 9 billion litres to 10 billion litres while rivals like New Zealand have grown rapidly.
In Australia, the big processors are all fighting desperately for farmers’ milk and are trying to stimulate milk supply growth.

United Dairyfarmers of Victoria president Tyran Jones said that for the first time in a long time dairy processors are undertaking major investments.

«There’s something in the order of $1.5 billion in new and upgraded plants [under construction],» he said.

Australia’s biggest dairy exporter Murray Goulburn is consulting its farmer-shareholders to try to raise $500 million in a partial public listing on the ASX. The proceeds would be used to fund growth initiatives.

ASX-listed Bega Cheese has launched a $25 million program to strengthen ties with its farmers and encourage growth.

Farmers with Bega-approved projects can receive upfront payments equivalent to about 2 cents a litre for projects that will increase supply by about 20 per cent over three years.

Danny Blake, a Bega supplier with about 500 cows in Victoria, has just signed up to a Bega growth project.

«If you are going to stay in any business you need to invest,» Mr Blake said.

«The problem that all the factories have is there are only so many suppliers out there. They only have two real options for milk and that’s to poach suppliers or try to grow supply on farm from existing suppliers.»

Innovative method for farmers

Fonterra’s Equity Partners’ Fund could be an innovative method of equity funding for Australian farmers. The fund would invest at farm level to encourage production growth, reduce dependence on debt financing and align the right long-term equity ­investors with dairy farmers.

«The fund is intended to complement, rather than replace, other forms of debt and equity funding,» Fonterra said.

It will release further details on the concept and consultation process later in the year.

«Everybody is looking for milk and the more ways companies come up with to grow investment in farms has got to be positive,» Mr Jones said.

Source: The Land

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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