20 Nov 2015

Worries over falling milk production - Fonterra

3:51 pm on 20 November 2015

There are concerns about meeting customer demands throughout the rest of the season amid falling milk production, Fonterra says.

Anchor Milk. Fonterra products

Photo: RNZ / Diego Opatowski

The dairy co-operative said its milk supply was 5 percent lower than this time last year, and it was expecting the overall reduction for the 2015/16 season to be down by 150,000 metric tonnes of whole milk powder.

Global dairy experts have recently said international buyers do not believe New Zealand's production is falling because, year on year, it has grown to record amounts.

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Fonterra managing director of global ingredients Kelvin Wickham said he was worried about meeting customer commitments.

"Because we are forecasting a significant reduction in milk... there's going to be less available to sell, there's less available to [the] Global Dairy Trade [auction]," he said.

"The season going forward is going to be quite a difficult balancing act with the unknown weather impacts."

Fonterra would meet customer commitments but milk would be moved into products with higher returns such as cheese, butter and protein rather than whole milk powder, he said.

Mr Wickham said he could not understand why people did not believe milk production was falling, when there were figures available as proof.

"We've been very transparent in our milk collection inventory datas... We were very clear our milk production is down 5 percent to the year to date, and our inventories are pretty much line-ball with last year - so you do get to the point, what more do you need to do?"

The speculation was taking place among traders and other parties, he said.

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