Nothing to fear from Kiwi dairy giant

By Andrew Shirley

BRITISH dairy farmers have nothing to fear from the formation of giant New Zealand milk co-operative Fonterra, claims the newly appointed chief executive Craig Norgate.

“Most of the concentration will be in Asia and Latin America, where the returns on capital are much greater.”

Fonterra was created three months ago as GlobalCo after the merger between the NZ Dairy Board and the countrys two largest co-ops, Kiwi Dairies and NZ Dairy Group, which between them represented 96% of the countrys 13,700 milk producers.

It is already the worlds largest dairy exporter and has a turnover of US$5bn (3.4bn), putting it ninth in the worlds dairy company rankings.

It has also struck an agency deal with DairyAmerica, the biggest skimmed milk powder producer in the US, and is in discussions over joint ventures with Nestlés interests in the Americas.

Mr Norgate, however, did not rule out some form of European merger in the future.

“A foot in the door would be good, but not if it involves a large amount of capital expenditure.”

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