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The future

Demand for dairy is growing at an average 2.7 percent a year, the equivalent of 147 billion litres of growth over a decade, or a whole new New Zealand dairy industry opening up each year. This growth can be broken down into two categories. Demand in the globally traded market for dairy commodities such as milk powders is forecast to grow by around 1.2 percent, while annual growth in fresh dairy is expected to be in the region of 4 percent.

Fonterra’s aim is to continue to do well in the globally traded market, while capturing the international growth opportunities in fresh dairy. Dairy demand through to 2019 is expected to be:

  • India (highest) - 45 million MT
  • China - 36 million MT
  • rest of Asia - 19 million MT
  • Latin America - 18 million MT
  • Middle East/North Africa - 13 million MT.
Five people outside a KFC outlet in Thailand biting into bite sized egg tarts made from Anchor Whipping Cream.

With the exception of the trade-protected market of India, Fonterra has well-established positions in each of these markets.

Fonterra’s strategy is to develop strong customer partnerships with leading companies in the food and nutrition industries to become their supplier of choice, and to continue to build its brands in growth markets within Asia, the Middle East, and Latin America.

With large international customers wanting the confidence of a year-round, global supply, Fonterra is increasingly complementing New Zealand-sourced milk with overseas supply, to provide and continue supporting the growth of fresh consumer dairy products.

In 2010/11, Fonterra sourced 22 billion litres of milk globally, including 20 percent of Australia’s production and 24 percent of Chile’s, both countries where Fonterra has well established consumer brand operations. In Latin America it sourced 2.6 billion litres of milk for its joint venture with Nestlé. New Zealand milk collection was 15.4 billion litres, representing around 89 percent of the country’s milk production.

Growth in global sourcing will continue with Fonterra aiming to develop its own milk production capabilities within key growth markets. China is one example and there are feasibility studies currently underway involving opportunities in other markets such as India.

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