April 3, 2014

Fonterra Australia and Woolworths announce 10-year milk partnership in Victoria

The proposed long-term arrangement will give farmers certainty that will allow them to invest in their businesses with the confidence that they have a guaranteed buyer for their milk. Woolworths' existing contracts were for a period of one year.

The proposed deal will see Fonterra investing for the future of the Australian dairy industry by investing more than US$30 million into a state-of-the art milk processing plant at its Cobden site in South West Victoria. The modernised facility at the Cobden site will be commissioned in early 2015.

Woolworths managing director of supermarkets, Tjeerd Jegen, said, "Changes like integrated seals for milk containers and new, state-of-the-art processing equipment would not be possible without the investment brought about by this certainty. It's these innovations that will see better tasting, fresher milk available in Woolworths stores.

Fonterra Australia managing director, Judith Swales, said Fonterra is excited to partner with Woolworths in this milestone initiative. "This proposed arrangement will help us deliver on our strategy to provide healthy, nutritious dairy foods - in every dairy category - to Australians. It expands our current white milk portfolio complementing our Riverina Fresh milk business in New South Wales."

She added, "Just as importantly, the proposed arrangement will provide certainty for dairy farmers so they can invest on farm and grow their milk production. Australia is our second largest milk pool outside of NZ, so we take a long-term view and aim to deliver profitability, growth and sustainability in the Australian dairy industry."

Fonterra and Woolworths will continue to work together to finalise contractual arrangements to reach a binding supply agreement.