It's life Jim,  but not as we know it.




   Keith Woodford Posts   

Keith Woodford is an independent consultant, based in New Zealand, who works internationally on agri-food systems and rural development projects. He holds honorary positions as Professor of Agri-Food Systems at Lincoln University, New Zealand, and as Senior Research Fellow at the Contemporary China Research Centre at Victoria University, Wellington.



Directors Craig McMillan and Greg Terill have collectively over 40 years’ experience in the lining industry, and have been involved in installations throughout New Zealand, Australia and the Pacific region.


New Zealand Grazing is focused on reliably growing dairy heifers to the highest standard, our experience has been gained working alongside thousands of farmers around the country. We were selected by Fonterra and Silver Fern Farms to grow their young livestock.


Fonterra to exit Russian businesses


Fonterra has today announced it will exit its businesses in Russia. This follows the Co-op’s decision to suspend shipments of product to Russia at the end of February.

CEO Miles Hurrell says “our first step following Russia’s invasion of Ukraine was to establish the safety of the team in Russia, and our priority through this process continues to be doing the right thing by our people.

“We then suspended shipment of product to Russia while we assessed the impact of economic sanctions and discussed our long-term plans with our customers and joint venture partner.

“Following careful consideration of the impact on our people and our long-term plans for the Russian market, we will now close our office in Moscow, re-deploying staff where possible, and withdraw from our joint venture Unifood.”

Fonterra exports a small amount of product to Russia, primarily butter, totalling about 1% of our annual exports.

“Given the current strong demand for New Zealand dairy, we are confident in our ability to re-allocate this product to other markets,” says Mr Hurrell.

New Zealand has been exporting butter to Russia for more than 40 years. Fonterra entered the joint venture Unifood in December 2018.

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17 March 2022


Fonterra’s CFO Marc Rivers to leave the Co-op

Fonterra today announced that its Chief Financial Officer (CFO) Marc Rivers will be leaving the Co-op at the end of 2022 following its Annual Meeting.


Chief Executive Officer Miles Hurrell says Mr Rivers joined Fonterra in 2018 and has played a critical role in resetting the financial health of the Co-operative.


“It’s been clear from day one that Marc felt a great sense of responsibility to our farmer owners, unit holders and also New Zealand’s economy.


“Our balance sheet is now in a strong position. We have a long-term strategy with clear targets out to 2030 and our farmer owners have given the green light on our Flexible Shareholding capital structure. Marc has been instrumental in all of these areas.


“We are moving from reset to a new phase of creating value, and Marc has decided that this is a natural point in time for a move.


“I would like to thank Marc for his contribution to Fonterra and for his counsel and advice to me, the Fonterra Management Team and our Board.


“Marc has agreed to stay until our Annual Meeting at the end of the year which will also allow for him to support me in identifying his successor and ensuring a smooth transition and handover.”


CFO Marc Rivers says his time with Fonterra has been a privilege.


“I’ve learned a lot and also had the opportunity to be a meaningful part of the lives of many people across our Co-op.


“We have worked together to rebuild the health and wellbeing of Fonterra and I look forward to seeing the goodness the Co-op creates over the coming years.”


A search for a new CFO will begin shortly.


17 March 2022


Fonterra reports its Interim Results

•    Total Group Revenue: NZ$10,797 million, up 9%

•    Reported Profit After Tax NZ$364 million, down 7% 

•    Normalised Profit After Tax: NZ$364 million, down 13%

•    Total Group normalised EBIT: NZ$607 million, down 11%

•    Net Debt: NZ$5.6 billion, down 8% 

•    Total Group normalised Gross Profit: NZ$1,607 million, down 7%  

•    Total Group normalised Gross Margin: 14.9% down from 17.4% 

•    Total Group Operating Expenditure: NZ$1,062 million, up 1%  

•    Normalised Africa, Middle East, Europe, North Asia, Americas (AMENA)
EBIT: NZ $250 million, up 25% 

•    Normalised Greater China EBIT: NZ$236 million, down 20% 

•    Normalised Asia Pacific (APAC) EBIT: NZ$158 million, down 33% 

•    Full year forecast normalised earnings per share: 25 - 35 cents per share 

•    Interim Dividend: 5 cents per share 

•    Forecast Farmgate Milk Price range: NZ$9.30 - $9.90 per kgMS 

•    Forecast milk collections: 1,480 million kgMS, down 3.8% 


Fonterra Co-operative Group Limited today announced its 2022 Interim Results which show the Co-op has delivered a half year Profit After Tax of NZ$364 million, a Total Group normalised EBIT of NZ$607 million, and a decision to pay an interim dividend of 5 cents alongside a record high forecast Farmgate Milk Price.


Fonterra CEO Miles Hurrell says the Co-op’s results for the first half of the financial year show it is performing well, while creating the momentum needed to achieve its 2030 targets.


“The world wants nutritious, sustainably produced dairy and that’s what we do well. We have continued to see strong demand for our products across multiple markets at a time of constrained supply.


“Our earnings have been achieved at a time when our input costs have been significantly higher with the average cost of milk up almost 30% on the same time last year. This shows we’re performing well even with a high Farmgate Milk Price.


“The Board’s decision to pay an interim dividend will be welcome news for our unit holders and farmer owners.


“The milk price is also good news for our farmer owners and the New Zealand economy - a midpoint of NZ$9.60 would see the Co-op inject over $14 billion into our local communities through milk price payments alone.


“COVID-19 continues to be a challenge in our markets and here at home. We’re seeing more of our employees having to isolate and continued disruptions in our supply chain.


“However, by caring for our people and good management and planning, our manufacturing plants have continued to operate and we are getting products to our customers.”


Commenting on the Co-op’s long-term strategy, Mr Hurrell says it’s been six months since the Co-op announced it and while it’s early days, the shift from reset to growth is well underway.


“This would not be possible without the hard work of our farmer owners and employees, and I want to thank them for their commitment and support.”



From a performance perspective, Mr Hurrell says the Co-op delivered a Profit After Tax of NZ$364 million, down $27 million on the same time last year, and a Total Group normalised EBIT of NZ$607 million, down $77 million, reflecting the significantly higher milk price.


“Margins in our Ingredients channel improved in the first half. However, the higher milk price put pressure on our margins in Foodservice and Consumer, and we also felt the impact of COVID-19 in many of our markets. Lower New Zealand milk collections reduced our total production and this impacted our overall sales volumes. 


“Despite these challenges, AMENA had a stronger start to the year. Our teams across AMENA delivered a 25% increase in normalised EBIT to $250 million. This was driven by improved performance in our Chile business and increased sales of higher value ingredients, used in products such as high protein snack bars and ready-to-drink medical nutrition beverages.


“In Greater China, we have continued to see firm demand for dairy as our team finds new ways to drive demand. Ingredients benefited from strong demand and good margins. However, normalised EBIT is down 20% to $236 million, particularly in Foodservice where, despite steady volumes, the higher milk price impacted gross margins.


“APAC’s normalised EBIT decreased by 33% to $158 million. While gross margins in our Ingredients channel improved, this was more than offset by the higher cost of milk which impacted gross margins in both Consumer and Foodservice, particularly in our South East Asia and New Zealand businesses.”


Mr Hurrell says the Co-op has continued its focus on financial discipline and reducing debt.


“Our net debt is down 8% on the same period to $5.6 billion and our Gearing Ratio is now 44.1% versus 47.3% last year. As is usual at this time of the year, these figures reflect the seasonal peak. We expect further reductions in debt and gearing by the end of the financial year.


“At $1,062 million, our Total Group Operating Expenses are tracking more or less in line with last year, despite inflationary pressures and on-going disruption from COVID-19.”


The record date for the payment of the 5 cent dividend is 24 March 2022, and the payment date is 14 April 2022.



Commenting on the Co-op’s strategy, Mr Hurrell says it’s early days, but through the Co-op’s strategic choices to focus on New Zealand milk, be a leader in sustainability and be a leader in dairy innovation and science, it is putting in place the necessary building blocks to grow Foodservice, strengthen its Consumer channel and move towards higher value products in Ingredients.


Focus on New Zealand milk

“Our new ‘Flexible Shareholding’ capital structure will be critical in helping us maintain a sustainable New Zealand milk supply in an increasingly competitive environment. 


“Following the successful farmer vote, we are continuing to work with the Government on a regulatory framework which supports the structure. These discussions are progressing well.


“While we don’t have a firm date for when regulatory changes will be made, we expect to be able to provide a timeline for farmers in the next couple of months.


“We are also continuing to make progress on the divestment of our Chilean business and the ownership review of our Australian business.


“Both Soprole and Fonterra Australia are performing well and our priority is to maximise the value of both businesses to the Co-op.


“We will take our time to ensure the best outcomes from these processes and remain confident on delivering on our intention to return around $1 billion of capital to our shareholders and unit holders by FY24.


“Our teams are always looking to drive demand for New Zealand milk by developing new ways of using our products in local cuisine to find the next big food trend.


“In Greater China, using the power of social media, the team promoted the idea of mozzarella on dumplings. The dish gained huge attention and sparked a new trend in the lead up to the Lunar New Year.


“In the Middle East, our team launched Red Cow - a more affordable range of products we sell direct to customers, such as bakeries, to help us capture a greater share of the foodservice market.


Be a leader in dairy innovation and science

“We continue to develop new dairy innovations to help customers as they look to nutrition solutions to help them live longer and healthier lives.


“Through our transformative dairy science collaboration with VitaKey we are aiming to further unlock the benefits of our probiotic strains. 


“VitaKey specialises in precision delivery of nutrition which would allow us to design dairy products that incorporate targeted and time-controlled release of specific dairy nutrients in a way that allows the nutrients to be more beneficial in our bodies. 


“The project is ahead of schedule and we’ve expanded the scope to include several micronutrients, such as Vitamin D. 


“Meanwhile, in the area of nutrition science solutions, we are continuing our work to understand this health and wellness trend and where we can build a competitive advantage.”


Be a leader in sustainability

Mr Hurrell says by continuing to invest in sustainability, the Co-op will ensure its milk is backed by the sustainability credentials consumers want and it will be better able to support its customers in their sustainability journey.


“This is why we have an aspiration to be net zero by 2050, and over the next decade we intend to invest around $1 billion in sustainability initiatives to support that.


“Finding a solution to the methane challenge will be a gamechanger. That’s why the results of the next phase in the Kowbucha™ trials - a probiotic which could switch off the bugs that create methane in cows - are so exciting. After moving from the lab to farm, initial results have shown a reduction in methane of up to 20% when fed to calves. The trial is now continuing to the next phase.”


Mr Hurrell says the Co-op’s focus on sustainability is gaining recognition and helping to maintain and win business.


“Our NZMP Organic Butter – carbonzero™ certified, developed to help our customers achieve their own sustainability goals, has been recognised internationally, winning two innovation awards.


“Our low carbon milk and sustainability credentials have recently helped us retain business in our Foodservice channel. Like us, one of our Quick Service Restaurant customers has a goal to be net zero by 2050. By simply using our products over a competitor’s, they’ve been able to reduce their carbon emissions by the equivalent of taking 1,760 cars off the road.”


FY22 Outlook

Commenting on the second half of the year, Mr Hurrell says the forecast Farmgate Milk Price range of $9.30 - $9.90 per kgMS and forecast normalised earnings guidance of 25 – 35 cents per share remain unchanged.


“While the milk price is at a record high, pricing in our Ingredients business, for both reference and non-reference products, has been supportive of both milk price and earnings and we expect this to continue in the second half.


“In the medium term, we expect the supply and demand outlook to go some way towards underpinning a strong milk price next season.


“There are a number of risks we are continuing to watch closely. The conflict in Ukraine has added to an already complex COVID-19 operating environment, impacting global supply chains, oil prices and the global supply of grain.


“However, our lower debt levels mean we are in a stronger position to weather the heightened levels of uncertainty and market volatility the world faces right now.


“We will also continue to use our Co-op’s scale to ensure we are putting our Co-op’s milk into the products and places where we can deliver the most value under the circumstances.”

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24 February 2022


Fonterra lifts forecast Farmgate Milk Price and maintains earning guidance range


Fonterra Co-operative Limited today lifted its 2021/22 forecast Farmgate Milk Price range to NZ$9.30 - $9.90 per kgMS, up from NZ$8.90 - $9.50 per kgMS.

This increases the midpoint of the range, which farmers are paid off, by 40 cents to NZ$9.60 per kgMS.

Fonterra CEO Miles Hurrell says the lift in the forecast reflects the increase in global dairy prices since the Co-op’s last milk price update in January, and good levels of ongoing global demand for dairy.

“Since we last revised our forecast, average Whole Milk Powder prices on GDT have increased 10.3%, while Skim Milk Powder has increased 8.4%. Both products are key drivers of our milk price.

“Global demand for dairy remains firm, while global milk supply growth continues to track below average levels. These demand and supply dynamics are supporting the increase in prices.

“Milk production in the EU and US continues to be impacted by the high cost of feed and this is not expected to change in the coming months.

“Here at home, ongoing challenging weather conditions have continued to impact grass growing conditions. As a result, the Co-op has revised its 2021/22 New Zealand milk collections forecast to 1,480 million kgMS, down 3.8% compared to last season, noting that last season generally benefitted from much better growing conditions.

“This reduction in supply reinforces our strategic focus on ensuring our milk is going into the highest value products.

“The forecast midpoint of NZ$9.60 per kgMS represents a cash injection of over $14 billion into New Zealand’s economy through milk price payments alone, and will be welcome news for farmers who are facing rising costs on farm, including from inflation and rising interest rates. 

“Analysis by Statistics New Zealand shows a number of key farm inputs have experienced significant inflation pressure over the past two years, for example electricity costs are up 21%, while stock grazing costs are up 36.9%.”

Mr Hurrell says while the higher forecast Farmgate Milk Price puts pressure on the Co-op’s margins in Consumer and Foodservice, prices in its ingredients business remain favourable for milk price and earnings at this stage.

“As a result, our current 2021/22 earnings guidance of 25-35 cents per share remains unchanged.”

“As we shared last month, there are a number of factors we are continuing to keep a close eye on, including the potential impact on demand from rising interest rates and inflation, increased potential for volatility as a result of high dairy prices, geopolitical issues and economic disruptions from COVID-19, particularly as governments manage the rapid spread of the Omicron variant.”

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