Wednesday, September 23, 2015

Fonterra is stockpiling product

Fonterra Cooperative Group Ltd. of New Zealand is stockpiling dairy products in an effort to curb the rapid slide in prices.

It is holding products off the auction, but many wonder how long Fonterra can continue to do that.

China is one of the company’s biggest customers and turmoil in the Chinese stock market has reduced demand.

The New Zealand currency has fallen 19 per cent and the government has cut interest rates three times this summer in an effort to ride out Fonterra’s challenges.

Fonterra has monopoly on New Zealand’s dairy exports which are the mainstay of the national economy.

Fontera and New Zealand are lobbying hard for a reduction in Canadian and U.S. dairy-product tariffs so they can capture a bigger slice of those markets.