Fonterra to explore co-op idea for Australia

Fonterra Australia managing director Rene Dedoncker.
Fonterra Australia managing director Rene Dedoncker.

The south-west dairy industry could be set for further big changes with Fonterra Australia discussing the possibility of becoming a cooperative to replace the dairy farmer advocate role that had been played by Murray Goulburn (MG).

Fonterra also announced its south-west plants will be part of a $100 million investment to increase its milk processing capacity in Australia.

The announcement sets the stage for a spirited battle between Fonterra and Saputo for more milk supply. Saputo, the owner of Warrnambool Cheese and Butter, has said it will build up production at the plants it wants to buy from the ailing MG. 

Fonterra Australia managing director René Dedoncker said the two billion litres of milk its plants will process this season would bring them to full capacity and it wanted to increase capacity by 500 million litres across its sites.

Mr Dedoncker said Fonterra believed Australian dairy farmers wanted the option of a co-op and the Bonlac Supply Company (BSC), which represents Fonterra suppliers, had supported the concept being explored.

Fonterra Australia is owned by the giant New Zealand-based Fonterra co-operative that has always talked about having a global co-op.

BSC chairman Tony Marwood said the demise of MG did not mean that co-ops did not work in Australia.

He said many of the world’s biggest dairy processors were co-operatives that provided benefits to dairy farmers rather than external investors.