Potential Of Cull Stock Pooling Scheme

17 September 2007

Fonterra Looking Into Potential Of Cull Stock Pooling Scheme

Fonterra and its subsidiary RD1 are looking into the potential of a pooling scheme for cull cows and bobby calves to secure a premium for the company's 11,000 farmer-shareholders.

RD1 Director and Head of Fonterra Milk Supply, Barry Harris, says that there has been a lot of interest expressed by Fonterra Shareholders for the company to look into this area. The company is working with farmers to assess the business case and viability of such a scheme.

"We have a clear focus on establishing whether we might be able to capture a premium or additional value for Fonterra farmers. That's what would be required to get this off the ground - there has to be a solid benefit for our farmer-shareholders who provide stock."

Mr Harris says the large collective volume of cull dairy cows and bobby calves from Fonterra farmers would be attractive to meat processors, given the current overcapacity in the meat industry. The success of the scheme would come from Fonterra farmers "really getting in behind the pool and generating large numbers of animals for tender to the meat companies."

The commercial value of the pooling scheme would be based on increased utilisation of meat processing plants, better planning and gains from streamlining stock collection creating a "win-win for meat companies and farmers through sustainable premiums for bobby calves and cull cows from Fonterra farmers," Mr Harris says.

Mr Harris says, while the feasibility and value of the pooling scheme is still to be determined, it would not involve direct investment from Fonterra.

He says any support for the scheme would be provided through RD1's livestock division and existing resources - with a possible start in the cull cow season in March 2008, subject to commercial negotiations with meat companies.

Fonterra farmers interested in participating in a pooling scheme, can register their interest by contacting Fonterra's Supplier Services Team on 0800 65 65 68 or fencepost@fonterra.com.

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