Fonterra faces farmer pressure over declining milk collection share

NEW ZEALAND – Fonterra, New Zealand’s largest dairy co-operative, is under increasing scrutiny from its farmer shareholders as its share of the nation’s milk supply declines.

At its annual meeting in New Plymouth, the Co-operative Council highlighted that Fonterra’s milk collection share fell to 78.1% in 2024, missing the council’s target of 79%.

Co-operative Council Chair John Stevenson expressed concern over the shortfall, describing it as a critical issue for members.

During the meeting, farmers raised questions about Fonterra’s milk retention policies, suggesting they may be less competitive than those of rival companies.

“There needs to be urgency in retaining milk,” one farmer commented, citing Synlait as a proactive competitor.

Fonterra CEO Miles Hurrell acknowledged the challenge and pointed to the regulatory framework under the Dairy Industry Restructuring Act (DIRA) as a factor.

DIRA was designed to ensure competition in the dairy sector but has also introduced pressures on Fonterra.

“We believe there’s a conversation that needs to happen in Wellington about whether DIRA has run its course,” Hurrell said, hinting at the need for legislative updates to enhance the co-operative’s competitive edge.

Hurrell also emphasized that farmers have the right to choose where to supply their milk but expressed confidence in Fonterra’s strategy to offer compelling reasons for loyalty.

Some farmers called for government intervention to support the broader dairy industry, which faces challenges in sustaining growth.

Hurrell agreed that collaboration with policymakers could align with national goals, including the government’s target to double exports by 2035.

He noted, however, that the dairy industry must demonstrate responsible and strategic action to justify such support.

“There’s no better sector to back than dairy,” Hurrell said, emphasizing its role as a cornerstone of New Zealand’s export economy.

As Fonterra contends with declining supply and heightened competition, the co-operative’s leadership is under pressure to implement measures that will reinforce farmer loyalty and sustain New Zealand’s position in the global dairy market.

Strategic adjustments and discussions with policymakers are expected to play a crucial role in shaping Fonterra’s path forward.

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