Commodities pay the way for Fonterra

NEW ZEALAND – Commodity products will continue to remain the focus of Fonterra’s investment, despite the fact that a strong New Zealand dollar is threatening the company’s payouts to farmers.

Speaking at a London news conference, Fonterra chairman Henry van der Heyden said that the majority of the company’s investment will be in whole milk powder (WMP) and not in value added products for the ingredients market. “Historically, we’ve got better returns out of WMP than the alternatives,” head said. “We won’t move out of skimmed milk powder and butter, but our new plants will produce WMP.” Van der Heyden went on to say that the strong NZ dollar and weak US dollar was having a serious impact on the business. 95% of its product is exported, with much going to the USA. He added that he was “very cautious” about medium term prospects.

He also confirmed his faith in Fonterra’s future: “There is not an element of doubt in our minds. It’s all about strength in he market