Farmers eye milk price as Fonterra is set to unveil strong earnings, scientists turn greenhouse gases into livestock nutrition, and golden year for Kiwifruit as exports break records.

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Farmers eye milk price as Fonterra is set to unveil strong earnings

Fonterra is poised to reveal its financial results for the 2024 year tomorrow, with industry watchers anticipating robust earnings. However, for the co-operative's nearly 8,000 farmer-owners, the announcement of the milk price will take centre stage.

John Stevenson, chairman of the Fonterra Co-operative Council, emphasised that the milk price is always the primary concern for farmers, as it constitutes the largest portion of their returns from dairy farming. While the 2023-2024 dairy season concluded on May 31, farmers are still awaiting full payment, making this announcement particularly significant.

There's also keen interest in any potential increase to the farmgate milk price forecast for the current 2024-2025 season, which currently stands at a midpoint of $8.50 per kilogram of milksolids. Stevenson noted this forecast exceeds the latest national break-even price of $8.09, as calculated by DairyNZ. However, he cautioned against over-optimism, reminding that the season is still young and many challenges lie ahead.

Another key area of interest is Fonterra's progress on evaluating the potential sale of its global consumer business, valued at over $3 billion. This strategic decision could have far-reaching implications for the co-operative's future direction.

On a positive note, the Fonterra Co-operative Council's annual survey revealed improving farmer sentiment. Satisfaction with Fonterra's overall performance has risen from 58% in 2023 to 65% this year. Confidence in both Fonterra's long-term future and the New Zealand dairy industry has also increased, reversing a downward trend from previous years.

However, farmers remain pragmatic in their outlook. Stevenson highlighted that even with potentially good results, farmers are unlikely to make large-scale investments or purchases. Interest rates are still consuming a significant portion of any free cash flow, and many farms have delayed capital investments that may need addressing.

Looking ahead, Fonterra farmers have identified key areas for the co-operative to focus on. These include improving margins, advocating to central and local government, investing in innovation, and retaining milk supply.

Scientists turn greenhouse gases into livestock nutrition

A groundbreaking project in the central North Island is set to transform geothermal gases into valuable livestock feed. Māori organisation Tauhara North No. 2 Trust is collaborating with geothermal experts and New Zealand scientists on this world-first initiative.

At the heart of this innovative process are two microorganisms - a bacterium and an algae. These tiny powerhouses convert carbon dioxide and methane, captured from geothermal power stations, into a protein-rich biomass. This biomass holds potential not only as animal feed but also for human nutrition and high-value nutraceuticals.

Mana Newton, the Trust's Group Chief Executive, envisions this project as a catalyst for new industries and job creation in the region. The Trust, which has significant investments in geothermal assets, sees this as an opportunity to leverage their resources for the benefit of mana whenua and regional communities.

The four-year research initiative marks a global first in developing biomass feedstock from geothermal gases. It utilises robust microorganisms that thrive in the extreme conditions found at geothermal sites, potentially kickstarting a new biomass feedstock manufacturing industry for New Zealand.

Steve Penno from the Ministry for Primary Industries highlighted the project's potential to reduce reliance on imported livestock feed while decarbonizing industries. Estimates suggest this new industry could be worth $500 million annually by 2045, creating new skilled jobs in the process.

The next phase of the project will involve scaling up production from laboratory to pilot scale, generating yields of up to 1,000 litres. Researchers will also explore potential markets for the biomass, including agriculture, aquaculture, and human nutrition.

The project has secured nearly $5 million in funding, with contributions from the Trust and the Ministry for Primary Industries. Rotorua-based Upflow will lead the research, working alongside experts from Scion, the University of Canterbury, and the Cawthron Institute.

Golden year for Kiwifruit as exports break records

New Zealand's kiwifruit industry is celebrating a remarkable achievement this year, with exports reaching unprecedented values. According to Stats NZ, kiwifruit exports were valued at $3.1 billion in the year ending August 2024, marking a substantial increase of $524 million or 20% compared to the previous year.

This record-breaking performance is largely attributed to the growing popularity of gold kiwifruit varieties. Gold kiwifruit exports alone accounted for $2.4 billion, showing a significant rise of $457 million or 24% from the previous year. This increase was primarily driven by a 23% boost in export quantity.

Green kiwifruit also contributed to the overall success, with exports valued at $737 million, up by $67 million or 9.9%. Unlike the gold variety, the green kiwifruit's value increase was mainly due to a 9% rise in price rather than quantity.

The kiwifruit export season, which typically runs from March to November, has seen a shift in grower preferences. New Zealand growers are increasingly turning to gold and red kiwifruit varieties to capture greater export value, particularly in lucrative markets like China and Japan. Gold kiwifruit, known for fetching higher prices than green varieties, has China as its top destination, while the European Union remains the primary market for green kiwifruit.

Alliance group opens nominations for key board positions

Alliance Group has initiated its search for new board talent as nominations open to fill two director vacancies, creating an opportunity for fresh perspectives to guide the company's future. The election comes in the wake of longstanding director Jason Miller's decision not to seek re-election after his current term, coupled with the earlier departure of Murray Taggart, setting the stage for a significant boardroom reshuffle.

Environmental sustainability ranks high on Alliance's priority list for potential directors, reflecting the growing importance of eco-friendly practices in the agriculture sector. Equally crucial is the ability to connect meaningfully with a diverse range of stakeholders, including customers, regulatory bodies, and iwi, as the co-op seeks to strengthen its relationships across the industry and wider community.

This board reshuffle presents an exciting opportunity for individuals passionate about shaping the future of New Zealand's meat industry, with Alliance Group's democratic process allowing farmer-shareholders to have a direct say in who will guide the co-operative's strategic direction in the years to come. 

McBride and Nicholls secure top spots in Fonterra's director race

And Fonterra has announced that incumbent directors Peter McBride and John Nicholls have earned the designation of Independently Assessed Candidates for the upcoming 2024 Farmer Directors' election. This year's election will determine two crucial Board positions, shaping the future direction of the co-operative.

Both McBride and Nicholls underwent a rigorous Independent Assessment Process, with their evaluations set to be included in the voting materials distributed to Fonterra shareholders. As current directors seeking re-election, they automatically advance to the final ballot.

Fonterra shareholders now have the opportunity to nominate additional Non-Assessed Candidates until noon on Thursday, October 3rd. Aspiring candidates need the backing of 35 different shareholders to enter the race.

The complete list of candidates, including both Independently Assessed and any Non-Assessed nominees, will be revealed on Friday, October 4th. 

Voting packs containing detailed candidate profiles will be mailed out from Monday, October 21, and the voting period will run until 10:30 AM on Tuesday, November 12th.