20 Mar 2019

Fonterra weighs in on sale of Westland Milk

10:09 pm on 20 March 2019

Fonterra has weighed in on the proposed sale of Westland Milk Products to Chinese buyers, saying it is sad to see the "demise of another New Zealand co-op."

No caption

Photo: rnz

Comments from the chair of Fonterra, John Monaghan, follow Westland Milk's conditional agreement to sell to China's Yili industrial group for $588 million.

Approval from shareholders and the Overseas Investment Office is still needed.

One of the conditions of the sale would be that shareholder farmers, who were existing suppliers, would have their contracts guaranteed by Yili, at a price comparable to Fonterra's minimum rate for 10 seasons.

Speaking at Fonterra's six-monthly results announcement today, Mr Monaghan questioned the worth of that 10-year pledge, and appeared to regret the sale of Westland entirely.

"We're sad to see the demise of another New Zealand co-op, and of course any supplier shareholders are welcome back into our co-op.

"I note with interest, you know, there's a benchmark to ten years to the Fonterra milk price, 10 years goes very quickly in what is an intergenerational business and it's what happens beyond that that becomes important," Mr Monaghan said.

Mr Monaghan also questioned the destination of profits when a New Zealand company was owned offshore.

"Our remit, I guess, as a co-op, is to bring our profits back to New Zealand, where nearly 50 cents in every dollar is spent in regional New Zealand and has benefits to the New Zealand economy."

Westland milk has been approached for comment.

Get the RNZ app

for ad-free news and current affairs