The NZ Agriculture Sector, Fonterra and Investors
- Author Mark Lister
- Published September 28, 2011
- Word count 591
This article provides an overview of a presentation made from Fonterra at our annual investor conference last month – June, 2011 about the NZ dairy sector. The presentation was said to have been one of the most interesting of the day from the clients who attended.
The presentation began with Jonathan Mason, Fonterra’s CFO, stating that NZ is a fantastic place for dairy farming, if not the best in the world. New Zealand’s abundance of water gives us a clear cost advantage compared to other countries around the world. Our rainfall averages two metres a year, more than double the world average of 0.8 metres, therefore offers a strong competitive advantage when it comes to our ability to provide pasture for grazing dairy cows. Other countries around the world have to supplement feed their stock to make up for the lack of grazing. NZ also has a stable political landscape and a reputation for safe, high quality food products in our favour.
Fonterra is a co-operative owned by 10,500 farmer shareholders. Some other interesting facts about Fonterra include:
-
They are the world’s largest exporter of milk powders.
-
They have revenue of $17bn and operating earnings of $1bn.
-
They have 432 tankers across 17 depots
-
They operate 86 plants in NZ
-
They have the largest milk dryers in the world.
-
They use 11 NZ ports to send 140,000 containers each year to its millions of customers around the world
-
Recently, Fonterra announced an increase in its forecast profitability for 2011
For a country that only accounts for approximately 2% of the world’s dairy production, NZ exports 95% of this offshore. This is in contrast to other dairy producing countries around the world where the vast majority is sold domestically.
China is a key export market for NZ agriculture that is continually growing as people in China migrate from rural areas to the cities – it forecasted that 350 million Chinese people will do this over the next 15 years. This movement leads to a growing middle class, which will see a rise in incomes, and an increase in demand for higher-value food products such as dairy produce and meat. Fonterra exported 31% of its dairy produce to China in 2010. China’s growing demand for high-value agricultural products bodes well for New Zealand.
The agriculture sector is a difficult investment theme for many New Zealanders to gain an exposure to. With the average dairy farm priced at$3.5m (according to the Real Estate Institute), most investors have limited options.
However, this may all change in the near future if the company is to be listed on the stock exchange. Owning a unit in this fund would not allow any voting rights, these would continue to be retained by farmers. Investors however would have access to distributions and changes in the market value of the units. It is not known exactly when such a move will happen, it could be as early as 2012, or it may not happen at all, should the Fonterra board decide not to proceed.
To you the investor, there are several reasons why you should keep a close eye on Fonterra - it is one of the top six dairy companies in the world, accounts for ¼ of our export earnings and is accountable for 7% of our GDP.
In addition, agriculture is the backbone of New Zealand’s economy. Having Fonterra as an investment option will provide many Kiwis the ability to invest in what really is ‘NZ Inc’.
With the long term growth potential for this dairy giant being huge – they are definitely worth watching.
This is a modified article from Mark Lister. To read the complete article visit www.craigsip.com. Craigs Investment Partners Limited (formerly ABN Amro Craigs.) is an NZX Firm that was established in 1984. It is one of New Zealand's largest and most established investment advisory firms.
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- SCOFI: Pioneering Venezuela’s Petroleum Industry for Over 65 Years
- To Understand Risk, Start By Asking What You Don’t Know
- How To Make Money On Binance: A Full Guide
- Airbnb Investment 101: Tips for New Hosts in Australia
- Indian Gold Demand Rebounds During Important May Festival
- The Investment Terrain in Crypto, Blockchain, and Web3
- Exploring Bitcoin: Corporate Giants Embrace the Cryptoverse
- The Significance of Static IP Address for Trading
- TYPES OF FOREX REGULATIONS
- Weekly Events: Avalanche & Chainlink Collaboration, CommEx Closure, And More
- Assani Elolo Ronaldo - How Bank Instruments Facilitate Gold Deals
- Crypto News: Mempool Solana Shuts Down, Police Integrate Cardano Into Their Work, WhiteBIT And FC Barcelona Launch New Course
- Is Crypto Entering 2021 Vibes?
- Bitcoin Updates All-Time High In Momentum Amid Its Scarcity
- Analyst Announces Bull Run Start, Cites Stock-to-Flow Strategy
- Weekly Crypto News: Telegram Pays Toncoins, WhiteBIT Is Now TradingView Broker And More
- undetectable banknotes
- Unlocking Financial Success: Why Successful Portfolios LLC is Your Best Advisor
- Are EVs a Threat to the Republic?
- A Deep Look Into Binance: Can It Really Be Trusted?
- Ledger Live - Most Trusted & Secure Wallet - Ledger
- Decoding the Future: Navigating the Crypto Landscape
- Don't Cry for Me General Motors
- Investing in exponential growth stocks: what can you choose
- Leveraging ChatGPT AI for Smarter Stock Market Analysis and Investments
- Shib, Doge, and Pepe Have a New Competitor: The Rise of $FUFU Token
- Unlocking Wealth: The Power of Apartment Syndication in Real Estate Investing
- 6 Reasons to Invest in Bitcoin
- Blockchain and AI Convergence: A New Era of Innovation
- Financial Planning for Small Business Owners: Tips for Success