At least 6 months ago my husband who works as an industrial electrician was send out to do some work in one of the Fonterra storage houses and he told me that the place was stocked to the roof and people working there told him that nothing was moving.
Nothing moved!! That means that Fonterra is stuck with huge amounts of dairy and not clients to take orders from.
They are producing to much!!! but prices here are not going down are they? So technically there is a glut and in a free market system that would mean prices would have to come down but they are not. Sounds to me like Fonterra is using it’s monopoly position to artificially keep prices high while the populations is under pressure with joblosses and ricing prices.
Fonterra has laid plans to follow the lead of the American government and begin stockpiling surplus milk powder.
Fonterra’s managing director of global trade, Kelvin Wickham, last week pointed the finger at the US Department of Agriculture for buying up more than 100,000 tonnes of surplus milk powder from US producers and stockpiling it in limestone caves near Kansas City.
What Wickham did not mention was that Fonterra was already well advanced in its plans to begin doing the same thing here, but not in limestone caves. Instead Fonterra will be stockpiling excess milk powder in modern, high stud warehouses up and down the country.
The diary giant is believed to have leased up to 70,000m2 of industrial storage space over the past two months.
Fonterra’s commercial director of global trade, Guy Roper, would not say by how much the company’s milk powder inventory had increased. But the storage industry’s rule of thumb suggests 70,000m2 would be sufficient to store around 120,000 tonnes of milk powder, roughly equivalent to 12% of this country’s milk powder exports last year.