Joanne and Jonathan Leigh are Fonterra farmers in the Waikato – a prolific dairy-farming region on New Zealand’s North Island – whose families’ connection to cooperative farming in this part of the world pre-dates the Fonterra brand itself.
Unusually for Fonterra farmers, the Leighs calve in the autumn and milk longer into winter, receiving payment incentives from the cooperative to help it keep up supply outside of a cow’s traditional seasonal milking cycle. In recent years, the Waikato has experienced low pasture growth rates during the summer due to extremely hot conditions, so milking in the winter – something done only by about 5% of Fonterra suppliers – actually works in their favour. They’re currently contracted to supply Fonterra with 300kg of milk solids a day from May to mid-July.
As shareholders in a cooperative, the Leighs are obviously subject to various safety and hygiene requirements – including an effort a couple of years ago to fence off waterways on Fonterra farms to keep calves from running into drains and streams. The Leighs have been compliant with that particular requirement for over a decade. But what support do they get from Fonterra, a NZD 19.2 billion ($15.5 billion) company, and how do they benefit from being part of a dairy cooperative?
Tell us about your farm – how big is it and what is it given over to?
Joanne Leigh: Our whole farm is 63 hectares, and we’ve got a dairy farm there milking 200 cows, which are autumn calving. They’re Friesian cows – generally it’s an advantage to have a Friesian herd when you’re milking during winter. We also have a calf-rearing unit on that same farm, where we rear 4–5,000 calves a year. We graze the cows on pasture, getting them ready for sale at 100kg, and some of the dry cows come here to this farm after they’ve stopped milking.
How does being part of a cooperative like Fonterra make your lives easier?
Jonathan Leigh: Supplying Fonterra, we know it’s in the benefit of all the shareholders whereas a privatised company you just never know when they’ll start going ‘right, we’ve got you now, we can start making some big profits’.
Joanne: I think it’s riskier, a lot riskier, to supply someone else. It goes against my own personal values about working with others and being in a cooperative and looking long-term, not short-term.
We know that if you’re part of a cooperative, there’s lots of different safety and quality criteria that you’ve got to meet. But what support does Fonterra give you along the way?
Joanne: Fonterra provides a lot of support – so if you’ve got a problem with your grading, if Fonterra picks up your milk and there’s a bacterial count higher than the limit is, you’ll get some demerit points. And you’ll continue to grade until you’ve found – there might be some split rubber where you’re milking the cows or it might be something in your plate cooler that’s got caught that’s got a build-up of bacteria or something like that. Generally if you get a grade you can find the problem. If you can’t find the problem, then…
Jonathan: We have experienced that once, where we looked everywhere and Fonterra were always on the phone to us saying ‘are you winning this battle?’ Sometimes your milk gets tested but you don’t get a result for three or four days, and they’ll say ‘if you’ve got an issue, we’ll send someone in’. They’ll come in free of charge, because it’s in Fonterra’s best interests to make sure we have healthy milk. If you’re doing the best you can and you can’t find the problem, then they’ll bring someone in and pull the plant apart.
We want to know as farmers that what we’re doing – is it sustainable or are we way out there? Do we have to look at this? And our biggest fear is the sustainability of our business, so they’re really helpful.
What sort of split is there between the milk price and owning shares?
So the milk price will be $6.15 or $6.10 for the current season and the dividend from the shares will be about $0.45, so it’s mainly from the milk price.
How much do you get to see from Fonterra, when you send your milk off, about the products they’re making and the trends they’re seeing in the market?
Joanne: Every month we have a booklet that comes out, and there’s always an article from the CEO [Theo Spierings] and the chairman of the board John Wilson, and then it tells stories about some of the different things that are happening in different markets. It talks about stock values in New Zealand, what’s happening, a few other bits and pieces, probably some of the stuff that might be coming in the future. Also, Fonterra holds shareholder evenings where we’ll have overseas speakers come in, so recently I heard a guy speak who was involved in China and he spoke about the cream cheese and how they are actually holding chef events, showing chefs how to use cream cheese in some of their desserts and that was a real eye-opener about how innovative Fonterra is being in some of these markets and how they’re very grounded about how they’re getting the word out – by actually teaching these chefs how to cook with these milk products in a culture that doesn’t traditionally use milk products.
Fonterra Milk for Schools – that was launched a few years ago – I was involved, they wanted some farmers to actually be in the advertisement on TV to launch it, so I was lucky enough to be one of the 15 farmers that got to drive tractors through the middle of Hamilton [at the heart of the Waikato] and ended up at a school and then we herded the kids into the classroom and pretended to teach them different things.
WATCH: The 2014 commercial for Fonterra Milk for Schools that Joanne was involved with.
Then, as a follow up to that, I was asked to go to Auckland and just do a little snippet of a video to follow up, another little advert – so the main advert played and then there was a snippet at the next ad break.
Jonathan: About how milk is good for you, aye?
Joanne: Milk is amazing. It’s full of protein for healthy muscles, and calcium for growing bones! Fonterra’s whole idea is to be authentic, and real, so it wouldn’t have been authentic to use actors in that whole advertising campaign and I think it’s worked really well – there’s been such a good take-up of Milk for Schools, and the kids love the milk and they’ve got fridges [in schools] that it’s kept in, and they’ve got milk monitors and they learn how to fold the milk carton up and it gets recycled – it’s a really cool programme and I think it’s made a big difference.
Talking about this authentic image, do you think the fact that Fonterra is a cooperative plays into New Zealand dairy’s image?
Joanne: I do. I actually think the other milk companies in New Zealand get a real benefit from that too, they ride on the back of it, they do! It’s a funny thing but it’s how we are. I think it will really bode well for our future because we’ve kept that grassroots, authentic feel. From what I’ve seen, because I’ve been involved with a few of these things where I’ve met some amazing people in head office, it makes me really proud that we’ve got some great people working our markets and having visitors throughout New Zealand and showing them around. Fonterra is actually seen in the business community as a very good employer, which is good to hear because we need good people. So if there’s so many people applying for the jobs then just the best ones are going to get them, and that just improves the way that the cooperative runs for the future. So I think it’s really positive. We feel very proud, and we feel there’s lots of support.
Joanne and Jonathan were talking to FoodBev’s Alex Clere
© FoodBev Media Ltd 2017