Fonterra Australia is bullish about its position as the farmgate milk bidding war continues for the upcoming season, despite the company opening with one of the lowest prices for 2022-23.
Speaking at an industry breakfast in Melbourne on Thursday, Fonterra Australia managing director René Dedoncker defended the company's decision to open its milk price at $8.25 a kilogram milk solids and its subsequent step up to $8.80c/kg MS, declaring the company had a responsibility to remain profitable.
"The reality is that I have an obligation to shareholders, so there is no reckless decision making happening here, and there is limits to everything, frankly," he said.
"We talk about everyone needing to make a dollar out of this, right?
"Farmers have got to make a buck, processors have got to stay profitable, retailers have got to make something and mums and dads have got to be able to afford it at the other end."
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Fonterra acknowledged some difficulties facing the dairy industry, but also highlighted company successes and the belief that it would secure enough milk for the 2022-23 season.
The company said some of the challenges the industry faced included international issues leading to increased dairying input costs, on-farm labour shortages, decreasing farm numbers and a smaller milk pool.
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Fonterra Australia farm source director Matt Watt addressed market challenges and said supplier numbers and the overall milk pool was declining in Fonterra's focus regions.
"There is no doubt that this is a challenging environment and we are seeing a reduction in supply in the regions that we operate in," he said.
Mr Watt said Fonterra's investment into farm business development initiatives for its farmers was providing a point of difference.
Fonterra Australia suppliers' council chair Alan Davenport spoke to his experiences as a Tasmanian dairy farmer and highlighted his experiences behind the farmgate.
"At the farmgate level, input costs are high and labour challenges are difficult," he said.
Mr Davenport also said these difficulties were leading a number of farmers to switch to beef cattle and other methods of farming because "there are other ways that you can make similar returns as a farmer".
When quizzed about the September 2021 announcement from Fonterra Co-operative Group Limited of an ownership review of Fonterra to sell off its Australian business, Mr Dedonker said no decision had been made.
"We will keep everyone updated ... but don't expect anything too soon on this," he said.