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.
