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History and origins

Fonterra's export ingredients.

Beginning in the early 1800s, New Zealand’s dairy industry has grown steadily ever since. The first co-operative cheese company was established in Otago in 1871, to benefit from the power of pooled resources.

'Fonterra’s Edendale site produced its first cheese in January 1882, and the following year won a £500 bonus offered by the government for the first export of 50 tons of cheese from a commercial operation in New Zealand. Edendale is now the world’s largest dairy processing site.'

By the turn of the century most dairy factories in New Zealand were owned by co-operatives, and by the 1930s there were more than 400. Some began selling their products overseas, however, this became difficult, so in 1923 the government established the Dairy Export Produce Control Board to control all dairy exports.

The Dairy Board gave farmers power to access new markets and earn better returns for their products. As a result the industry grew and prospered. Co-operatives began joining forces to become more efficient, aided by improved technologies in transport and refrigeration. These included whole milk collection by tanker from 1951, and cooling of milk on-farm, introduced in 1955. By the 1960s, 400 co-operatives had merged to become 168.

In the 1960s, the industry began to diversify both its markets and product ranges. By the 1980s the Dairy Board had 19 overseas subsidiaries and associated companies, rising to 80 by 1995. The New Zealand Dairy Board had become the world's largest dedicated dairy marketing network. The industry consolidated further and by 1996 there were only 12 dairy companies.

'Farmer Henry Reynolds started dairy factories in the Waikato in 1886 and chose Anchor as his butter’s brand name – because he saw a tattoo of one on a sailor’s arm. The brand is still sold today domestically and internationally by Fonterra.'

At the same time as expanding its overseas markets, new products were developed to improve returns to farmers. New Zealand's competing dairy co-operatives were forced to work together for the first time when the Government transferred the Dairy Board's assets to them in 1996. By the end of 2000, more than 95 percent of the industry was represented by two major companies - New Zealand Dairy Group and Kiwi Co-operative Dairies. Two smaller co-operatives, Westland and Tatua, held the remaining five percent.

In July 2001, 84 percent of the farmers voted to accept the merger of the New Zealand Dairy Board, New Zealand Dairy Group, and Kiwi Co-operative Dairies. This included rolling in the New Zealand Dairy Board’s operations with those of the merging co-operatives. The merger was achieved in October of that year and a new company, Fonterra Co-operative Group Limited, was created.

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