Fonterra is working to reshape its Australian business in the face of intense retailer pressure, strong rivalry among fellow milk processors and aggressive competition for milk supply.
At the dairy giant's annual shareholders' meeting held at Edendale near Invercargill on Wednesday, Fonterra reiterated that its forecast record payout to farmers of $8.30 per kilo of milk solids for the current season. Farmers will also receive a further 32 cents per kilo from value added products.
However the dairy giant warned that high costs are continuing pressure its profit margins.
Speaking after the meeting, chief executive Theo Spierings said Fonterra's key priorities in Australia include reshaping and reorganising the business.
For example, he says, Fonterra has removed some 17 brands and now only has four, has taken out $49 million and there is another cost saving programme of $50 million to go.
Mr Spierings said Fonterra is talking to retailers because it has to put itself forward as an attractive partner. It also wants to be part of conservation and needs to be aware of its environmental performance.
The volume of milk sold in Australia in the 12 months to July fell 2% due to Fonterra consolidating brands and to fewer private label sales.
Also on Wednesday, Fonterra said it has wrapped up its takeover of Tasmanian yoghurt business Tamar Valley Dairy.
