Fonterra is signing up farms to supply the a2 Milk company:
Mike Cronin, Fonterra Managing Director of Co-operative Affairs, says “Signing up New Zealand farms to significantly increase supply of high quality milk to The a2 Milk Company is a positive step forward. It clearly shows the strength of our strategic relationship, and our shared commitment to fast-track market growth and enable farmers to create additional value from their milk.”
The Co-op’s initial milk pool will be based in the Waikato around its Hautapu site and will support the production of ingredients. It is anticipated around 100 farms will be needed for next season.
Jayne Hrdlicka, The a2 Milk Company Managing Director and CEO, says “The a2 Milk Company is pleased to be making progress on our relationship with Fonterra. These farms will help support new growth areas for our company across existing and new markets. This is the next step in what we believe will be a fruitful long-term relationship with tremendous potential.”
The location of the milk pool was determined by several factors. Most importantly, the site needed the ability to manufacture the specific product in demand, produce relatively small batches and adapt easily to any product demand changes.
“While other regions were thoroughly considered, ultimately the decision must be demand-led. The ability to efficiently manufacture a range of products to meet that demand was the over-riding factor in choosing a site.As demand and product lines grow, we’ll look to expand the milk pool to enable more farmers to participate,” said Mr Cronin.
Most of the value from the relationship with The a2 Milk Company will be returned to all Co-op farmers through the dividend. Participating farms will also receive a premium for their milk.
Today’s development follows the national launch of the a2 Milk™ brand by Anchor from late September 2018.
There is debate about A2’s health benefits but it attracts a premium price.
Fonterra missed the opportunity to lead with A2 milk and the a2 company has prospered.
Most herds have some cows which produce A2 milk and if Fonterra wanted to corner the market it could require its suppliers to use A2 semen for artificial insemination and in a few years all cows would be producing A2 milk.
That it’s seeking suppliers to supply a2 suggests it won’t be taking that approach.