DairyNZ Dairy Environment Leaders Forum Chair and dairy farmer Tracy Brown is optimistic after Fonterra announced plans to shift towards a more New Zealand-focused market.
It comes after Fonterra reported a $605 million loss yesterday, in a delayed announcement that compares to a $196 million loss in the last financial year.
The loss is triggering a big asset sell-off and job losses. How the co-op performs is highly important to our economy, and it can have knock-on effects for many.
Ms Brown said the result was "obviously disappointing" and "a co-op's worst-ever result", adding that farmers and others involved "did know it was coming".
A big asset sell-off and job losses are expected.
"We've been signalled that there would be significant write down of assets, and some may argue that this should have happened two or three years ago," she told TVNZ1's Breakfast this morning.
"It is, in fact, the reason why the results were delayed – just getting the right information around those write downs and a bit of extra scrutiny," Ms Brown said. "But on the plus side, the operating expenditure and the capital expenditure have both been reduced significantly, which has freed up cashflow and allowed the co-op to repay some debts, so that's a good thing."
It is the second ever worst result for the dairy industry giant.
Ms Brown said she’s optimistic about Fonterra’s new strategy, adding that there "is some good stuff in there and at first glance, it does look good".
"It is a strategy for the time. The other strategy was during a time of growth and really big expansion," she said.
Ms Brown said the co-op is now moving on to what is known as the H3, or 'healthy people, healthy environment, healthy business' – "and top of that list is focus on New Zealand milk, which gets a really big tick".
"It's no longer about having more cows, it's actually about getting more value out of the cows that we have, and a lot of people will be pleased to see that, and it’s a move to get more out of components of the milk that add value to our customers.
"We really must look after our environment, people, as well as communities."
Scott Evans gave his response to Fonterra’s massive $605 million loss.
Ms Brown added that it is more important than ever to have a greater focus on New Zealand, rather than dominating the global market.
"We're in a sort of different world and in an expansion and a growth phase, and now, more than ever, we really have to nurture our environment, look after our people – people are number one."
Ms Brown said we should the farmers and the dairy giant should "help create long-term value, not only for New Zealand shareholders, but for New Zealand as a nation."
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