Fonterra putting milk back in schools

School milk was not one of the happy memories of my childhood.

A half pint was too much for me to drink at a time and it was usually warm. Besides, like most of my contemporaries we had plenty of milk at home.

Ample milk and adequate diets are no longer the norm for too many children and Fonterra CEO Theo Spierings has announced a plan to put it back in schools.

Mr Spierings says New Zealand has the potential to be the dairy nutrition capital of the world, and this should start at home with Kiwis drinking milk.

“When I took over this role I made a promise to take a fresh look at how we could make milk more accessible in New Zealand,” says Mr Spierings.

Milk is an important building block for good nutrition. We want Kiwi kids to grow up drinking milk because it is good for them.

We are looking to introduce a Fonterra Milk for Schools programme. We want all New Zealand primary school children to have access to dairy nutrition every school day. For some New Zealanders this initiative will bring back memories of the  Government programme which operated in New Zealand primary schools between 1937 and 1967. We’ll ensure this time that the milk is cold and tastes great.

The company is staring with a regional pilot for primary schools in Northland, covering 110 schools and 14,000 children, starting during the first term next year.

 It will be a voluntary programme for schools to opt into so we can get a fix on likely demand from schools for such a programme.   “We don’t want kids having to drink warm milk in summer like the old days, so we will look at installing refrigerators in schools, and also explore options for recycling the milk packaging,” Mr Spierings says.

Results from the Northland pilot will be monitored during the first three terms of the 2012 school year with the intention of progressing with a nationwide programme for the start of the new school year in 2013. Mr Spierings said Fonterra would welcome support from other partners for a nationwide programme, including the Government.

As a supplier and  shareholder in Fonterra I can see social, health, marketing and PR benefits from this scheme but it comes at a cost.

The company announced an increase in the forecast payout this week and even without that expected returns this year were reasonable. But what happens when the price of milk, and therefore returns to farmers, go down? Once the provision of  “free” milk is established it will be difficult to take it away again.

I’m definitely not keen on the government getting involved in the provision of school milk, especially if it’s not being aimed at only those in genuine need. Its money would be better spent on initiatives which address the causes of ill-nourished children.

The company has been criticised for the high price of milk on the domestic market and is continuing to review it.

Our motivation is to have more New Zealanders drinking more milk because it is important for basic nutrition. To achieve this, we have to make it available and affordable.

In recent years we have seen a major lift in international dairy prices which effectively doubled in 18 months. This has pushed up the cost of milk prices locally and we have seen consumption decline, with New Zealanders drinking less milk.

Traditionally milk consumption in New Zealand has been increasing around 1-2 per cent per year but it is currently declining by a similar rate.

“We are exploring a range of options to turn around the consumption decline by making milk more consistently affordable and will report back in the first quarter of next year,” Mr Spierings says.

Fonterra will also trial milk sales in its RD1 rural supply stores.

Anchor is our flagship brand and it makes sense to have it available in the 64 RD1 rural stores around New Zealand which we now own 100 per cent. “Initially we will be focusing on smaller towns that don’t have supermarkets nearby. From here we can measure the demand and decide whether to roll this out further,” Mr Spierings says.

Customers of RD1 stores are predominantly farmers. But if the stores sell milk well below supermarket prices they will broaden their customer base and the competition will probably force supermarkets to reduce their mark-ups.

3 Responses to Fonterra putting milk back in schools

  1. colin says:

    I work in the dairy industry, if my boss cuts my wages slightly so kids can learn better in schools I’m ok with that. The more educated and healthy kids are the less likely as teenagers they break into our house.

    The kids who go to school hungry, and probably never get milk but Coke etc will A) be better learmers with something in their gut and B) learn milk is a good drink, so maybe feed it to their own kids instead of coke.

    The kids who aren’t hungry at school, B) still applies we are creating more customers for our future.

    Like

  2. homepaddock says:

    Colin – this initiative will be paid for out of profits not wages but there’s nothing stopping you donating to a school or any of the many charities which help children.

    Like

  3. colin says:

    However Ele it stands to reason that if profits to farmers drop, they will pay their workers less. If you are looking to buy a herd at some stage, a declining local market is concerning so an investment in future consumers looks like a good idea.

    Yes I could donate to charity, and do when I can afford it. I haven’t fixed child poverty in NZ yet to busy working and saving to get myself out of poverty.

    Like

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