The co-operative model is credited with making New Zealand farmers the best paid in the world.
New Zealand farmers are getting paid much more than their counterparts overseas and it’s all thanks to the co-op model, says a corporate farmer and former Fonterra director.
Corporate farmer Earl Rattray, a former Fonterra director with farming interests in NZ and overseas, says the co-op model is working wonders for New Zealand farmers, who get paid much more for their milk than farmers in the other big milk producing and exporting countries.
Rattray points out that with Fonterra’s forecast milk price of $7/kgMS for this season, NZ farmers are getting about US41c/L for milk. Farmers in the US get 34c/L, in Europe US37c/L and in Australia US34c/L.
“It’s a good example of the co-op working well for farmers; it’s a milk price no one can argue with,” he told Dairy News. “Around the world, farmers are arguing about the milk price, wondering why theirs is going down, while in NZ its going up.
But in NZ, no one can argue with the Fonterra milk price because it is set from externally verifiable prices, set by the market every two weeks at auction. “NZ farmers can see what their milk is earning; it means it’s a milk price Fonterra has to pay farmers before it makes a profit and that puts us in a unique position.” . .
People outside the industry argue for Fonterra to be divided into two but farmers are adamant they must retain ownership of the whole supply chain to ensure they get paid well for their milk.
There are plenty of overseas models which show farmers getting squeezed by milk companies they supply but don’t own.
Not all milk companies in New Zealand are co-operatives but Fonterra also has a protective influence on them too. They know they have to offer a similar price to Fonterra’s to keep their suppliers.
Craig Presland, chief executive of Co-operative Business New Zealand, said: “The United Nations has recognised New Zealand as one of the most co-operative economies in the world. Our co-ops and mutuals generate almost one fifth of this country’s GDP, employ over 50,000 people and serve almost one-in-three Kiwis as members.
“Cooperative Business New Zealand supports and promotes the UN’s 17 Sustainable Development Goals, as we recognise that the co-operative business model is the most closely aligned towards supporting the UN in meeting these goals by 2030.”
According to Mr Presland, many of New Zealand’s co-operatives, particularly those from the agri-producer sector, are now investing heavily in achieving true environmental sustainability.
Last year, dairy giant Fonterra committed to restoring 50 key freshwater catchments. Its farmers have spent over NZ$1bn on environmental initiatives between 2012 and 2017, and fenced off more than 98% of significant waterways on farms.
Mr Presland added: “Ballance Agri-Nutrients and Ravensdown utilise satellite-controlled technologies to ensure the right amount of fertiliser is applied on the right pastures and at the right time. Agri-producer co-operatives work to maintain the longevity of the land where they grow crops through sustainable farming practices including responsible irrigation.
“Other initiatives from our agri-producer co-operatives include lowering greenhouse gas emissions through innovation and infrastructure, co-generation of energy including less use of fossil fuels, and the more efficient use of energy. Co-ops are also minimising waste from farm to consumer including the recycling of packaging and the introduction of farm environment plans that focus on reducing the impact of farming and manufacturing on the environment.” . .
Co-ops work for farmers and the environment.