Fonterra suspends shipments to Russia, enters new partnerships to expands global dairy platform  

RUSSIA – New Zealand multinational dairy cooperative Fonterra has suspended shipments of its products to Russia following the federation’s decision to conduct a “special military operation” in Ukraine. 

New Zealand exported goods worth US$240 million to the country last year, with dairy accounting for about of half of that, according to Figures from StatsNZ.  

Fonterra director of global stakeholder affairs Simon Tucker has downplayed the impact of the move on its business noting that the exports only accounted for just 1% of its annual exports.  

“While food, including dairy, is generally exempt from international sanctions regimes and can be traded, we have suspended shipments of product to Russia while we continue to monitor developments,” Tucker said. 

Tucker said none of its customers were sanctioned individuals or entities, including Russian military or security forces. 

The company further noted that its operations in Moscow and St. Petersburg continue to operate but it was “keeping an eye on the situation and will take actions as required.” 

Profile of Global Dairy Trade platform strengthened 

Elsewhere, Fonterra has entered into a strategic partnership with New Zealand’s Exchange (NZX) and the European Energy Exchange (EEX) in an effort to enhance the profile of its Global Dairy Trade platform.  

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The partnership will see Fonterra, NZX and EEX each holding an equal one-third (33.33%) shareholding in the global dairy auction platform. 

It’s expected to be completed in mid-2022 subject to the approval of boards, clearance from European or any other relevant competition law authorities, and finalization of transaction documentation.  

Fonterra chief executive Miles Hurrell said the move to a broader ownership structure marks the next step in the evolution of GDT as an independent, neutral, and transparent price discovery platform. 

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He further noted that the arrival of new strategic stakeholders will give GDT a presence in prominent international dairy-producing regions and create future growth opportunities.  

“This is good news for our farmer owners, unit holders, and all dairy industry participants and is expected to lead to greater volumes being traded on GDT,” Hurrell said.

“It will bring more participants and transactions, stimulating further growth of risk management contracts available on financial trading platforms”

Farmgate milk prices rise 

Earlier, Fonterra raised the forecast range for the price it pays farmers for milk in the 2021/22 season, citing an increase in global dairy rates due to strong demand and tight supply. 

‍Fonterra lifted its forecast for 2021/22 farmgate milk price to between NZ$9.30 and NZ$9.90 per kilogram of milk solid (kgMS) from NZ$8.90 to NZ$9.50 per kgMS. It increased the midpoint of the range by 40 NZ cents to NZ$9.60 per kgMS. 

The company also slashed its projection for New Zealand milk collection in the period by 3.8% to 1.48 billion kgMS as challenging weather conditions have continued to impact grass growing conditions in the country. 

Transporting milk the green way 

The New Zealand dairy co-op also recently trialled the first modern electric milk tanker at its Waitoa plant, near Auckland. 

The vehicle, which has a range of about 140km on a full charge and can carry 25,700 litres of milk, uses a cab and chassis are from Chinese construction machinery group XCMG 

The e-tanker is part of Fonterra’s electric vehicle strategy that will see a third of the co-op’s light vehicle fleet converted to EVs by the end of 2023, while also focusing on transitioning medium and heavy vehicles. 

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