January 14, 2026 • 9 mins
Fonterra's boss says farmers are used to volatility in prices and payouts.
Its midpoint forecast farmgate milk price for this season now sits at $9 after a string of falls in global dairy prices.
That's more than 10% lower than last season's final payout.
Chief Executive Miles Hurrell told Andrew Dickens most farms are intergenerational, so farmers understand the ups and downs of the commodity cycle.
He says the pace of the northern hemisphere increase in supply may have caught some people out.
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Speaker 1 (00:09):
You're listening to a podcast from News Talks, it'd be
follow this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
In twenty twenty five, it was the farmers who came
to the rescue. A new government push behind agriculture, perfectly
timed with soaring dairy prices, provided one of the few
bright spots in an otherwise bleak year, and that momentum
cap by the four point two billion dollar sale of
Fonterra's major brands like Mainland and Anchor Butter and so on,
(00:37):
putting a welcome Christmas present in farmers back pockets, which
then flows through the entire economy. So the CEO of Fonterra,
Myles Harrell, is the man that made it all happen,
and he joins you now, good boarding to you, Miles.
Speaker 3 (00:49):
Good morning herey, how are you.
Speaker 2 (00:50):
I'm very good mate. What a funny old year twenty
twenty five was, really? I mean, the prices went gangbusters
for a while and then they started to free fall.
So what was that about.
Speaker 3 (01:00):
Yeah, look, I mean it did come off the back
of what's been a couple of years of sort of
strong growth out there in the international market. So demand
was relatively strong despite I guess some of the international uncertainty,
the geopolitics in play, sort of a lack of milk
at the back end of twenty twenty four in the
international market, so all that sort of pushed those prices up.
(01:20):
But you know what they say, to solve these high
prices off. In high prices, you've seen a whole lot
more milks sort to turn up an international market at
the moment. It's putting a bit of downward pressure on
so full circle this year, I.
Speaker 2 (01:33):
Guess, so let's put down with pressure on farm gate
prices too, so because the difficulty you have is trying
to tell farmers what they're going to earn, and at
one moment you can say this number, but then suddenly
you can say another.
Speaker 3 (01:44):
Yeah, that's right. But you know, I think farmers, and
you know, we're inter generational business. Most of their farms
are being sort of handed through over generation, so they
understand sort of the ups and downs of the sort
of the commodity cycle. The pace is what I guess
catches people out. You know that the way that the
milk came on so quickly has come on so quickly
in the northern hemisphere and I guess that's sort of
called a few people out, but our farmers are prepared
(02:07):
for that. You know, they expect things to sort of
go up and down as the market moves, and so
they're well prepared for that, despite it being obviously not
not great news to drop a UK price.
Speaker 2 (02:18):
So that's dropping milk price. Is it going to rebound
anytime soon?
Speaker 3 (02:23):
Well, as I say, I think, I still think demand
is quite robust at the international market. You know, China's
sort of come off its loads of a couple of
years ago, so we're seeing good, good demand there. Supply
changes relatively when you look internationally, so you look at
some of the Middle East or Southeast Asian markets, I
think supply change is relatively so I think that put
a good base in the market. As I say, we
(02:44):
just need to see what happens with the supply. And
prices have dropped quite significant in Europe and they're starting
to slow in the US, so that should slow supply down.
So yeah, it could bounce, but which is why we
just have a range in it and our pricing for
the year ahead, just to give a bit of variability.
Speaker 2 (03:01):
Well, with that global competition so hot, how do we
maintain that we are the world's milk people.
Speaker 3 (03:09):
Yeah, well, we always have had a strong position internationally.
And you know, I think we've talked previously, ninety five
percent of our product that is made here in New
Zealand is exported, which is different from most other markets.
Most of the milk that's produced in Europe and North
America is consumed inside those territories, and so you know,
while those economies are in pretty good shape, you see
(03:31):
most of that milk consume. So we are the player
in the international market, which you know, on one side
means our price may move first as international demand picks up,
but at the same time we may also feel it
on the downside. So no, we are still very well
regarded internationally. We know the provident story, the way that
our farmers farm here in New Zunder those things resonate
with buyers. It's just when there's a bit more milk
(03:53):
in the market, you know, it's a buyer's market more
so than a sales markets.
Speaker 2 (03:57):
I always wondered if you taste it in American milk,
or European milk or an Australian milk, and then you
compare it to a New Zealand milk. Could you actually
taste the difference? I mean, can you taste the fact
that we have grass, big cattle that are making awesome milk,
the best in the world.
Speaker 3 (04:13):
When you talk I mean, the technologists will tell me otherwise.
But when you're talking liquid milk, probably not. But of
course the products we sell, our cheeses and butters and creams,
and absolutely you can tell the difference. I mean, the
way that we farm here, the pasture based system sort
of brings through the sort of the grassy notes, if
you can call it that, and those things resonate. Of course,
it's more yellow. Our products are more yellow than what
(04:34):
you get in the northern hemisphere, so those things they
do resonate with buyers that in those Asian and Middle
East An economy, So yes it does. But you know,
glass of milk, which is not really what we sell internationally,
it'd be hard to tell the difference, but those certain
ingredients you can.
Speaker 2 (04:50):
And how did you feel about the Argie barge, which
included the politicians who got into the price of milk
and New Zealand saying we make it here, we should
get the cheapest New Zealand milk anywhere in the world.
Was that understandable or was that a frustrating naive argument.
Speaker 3 (05:05):
Well, I guess we need to acknowledge that the New
Jeal economy has been under a bit of pressure this
last twelve or eighty months, and I think you mentioned
that at your outset, and so you know, it's no
question that people like us get put in the spotlight
and the questions are asked of us, and I get that.
You know, while Fontierra certainly is a big organization in
the headline number, we are really a collection of farming families.
(05:29):
I mean, they're just so happened to sit under the
Fonterira brand, but at the same time they are the
individual farming family. So it's important that we played the
international game, and you've seen that play out now with
this pricing come down, that will be reflect that I
suspect in the supermarkets in time. But ultimately, you know,
everyone's got a role to play, whether it be a consumer,
(05:50):
whether it be a politician, or whether it be us
as a producer.
Speaker 2 (05:54):
You sold your major brands, your value added brands, for
four point two billion dollars, which was very was greeted
with great thanks by farmers obviously, But the funny thing is,
for years we've had the argument that New Zealand just
exports raw product and that maybe we could make more
money if we actually had a value added product. And
here you are discarding your value added products. So what's
(06:17):
that about.
Speaker 3 (06:19):
Yeah, it's really important that people understand that this is
the business that actually has been the least return of
all our channels. So you know, we sell most of
our products through ingredients, and we talk about special ingredients
that go into maybe medical nutrition or sports an active
drink or sports drinker as you like. The second category
channel for us as food service, which is you know,
(06:40):
consuming products out of home, whether it be bakeries or
restaurants or the like. And the third channel from a
return perspective, as our consumer. So if people say you're
selling the value, it couldn't be further from the truth.
It is a least returning product because it has a
high capital cost to get product into the hands of consumers.
(07:01):
So you know, for us, it's about releasing that capital
back to both the business and our owners, leaving them
do something else with that can add a greater return
on the investment, and having us focus on, as I say,
those areas we make our most cash, which is the
ingredients business and our food service.
Speaker 2 (07:20):
Okay, so you wouldn't suggest to forestry owners that they
should stop exporting logs and start exporting cupboards.
Speaker 3 (07:28):
Well, I mean every business is different, So I clearly
couldn't comment on the forest industry because they's hitch outside
of mine. Okay.
Speaker 2 (07:34):
So this year there's been a lot of agritect news,
from fences herding of cattle, to pills that make cows
fart out less meat thane, to of course a halter
and the collar around the cattle's neck, which has been amazing.
How is technology going to change farming over the next
ten to twenty years and we as a farming community
ready for it?
Speaker 3 (07:54):
Well, I think the first thing is, yes, we are
ready for it. I think that you know, farmers have
been innovative. You know, we're one hundred and fifty odd
years as an industry now, and you don't survive through
through decades without being innovative as an industry. And so
farmers have led from the front on that and I
suspectate they'll continue to be so. So some of the
technology that you see and you refer to, then that's
coming to the fall now I think they're going to
(08:16):
be game changes. I mean, access to labor becomes more difficult.
You know, even trying to recruit recruit staff in rural
New Zealand is not easy at times. And so some
of this technology that our farms are starting to adopt
I think will be important for the years ahead. Add
to that the sustainability element. You know, we've got an
investment both industry and government, industry investment in agri ZERI
(08:38):
in New Zealand, which we've sort of targeted to try
and solve the methane challenge that industry has, and I
think again technology will come a long way to solve
in that over the next decade.
Speaker 2 (08:49):
So we're not a pig cow as yet, and we're
not a pick cow because the technology keeps making us
more efficient.
Speaker 3 (08:56):
Well, I mean it depends on how you look at that.
So you know, I think the cow numbers per se
have actually come down in New Zealand, so maybe we
have had to peak cow. But my point is that
we become more efficient, so you know, less environmental footprint
and maybe less cares for better output.
Speaker 2 (09:13):
Or good miles. Hurral. So finally, where does Myles Hurral
spend the summer, we'll both my wife and.
Speaker 3 (09:21):
I are from from christ ut so we'll spend a
few days down there with both both our parents, catching
up with them, and then probably spend some time at
the beach. It's been being ahic of a year, and
while milk still keeps coming and we're still going to
sell it, I'll take a take a week or two
off over the summer break and j with it with
my family.
Speaker 2 (09:39):
Miles Hurrell from Fonterra, I thank you so much for
your time today on the Summer Breakfast.
Speaker 3 (09:43):
Great. Thanks for much, Andrew.
Speaker 1 (09:45):
For more from News Talks B listen live on air
or online, and keep our shows with you wherever you
go with our podcast on iHeartRadio
You're listening to a podcast from News Talks, it'd be
follow this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
In twenty twenty five, it was the farmers who came
to the rescue. A new government push behind agriculture, perfectly
timed with soaring dairy prices, provided one of the few
bright spots in an otherwise bleak year, and that momentum
cap by the four point two billion dollar sale of
Fonterra's major brands like Mainland and Anchor Butter and so on,
(00:37):
putting a welcome Christmas present in farmers back pockets, which
then flows through the entire economy. So the CEO of Fonterra,
Myles Harrell, is the man that made it all happen,
and he joins you now, good boarding to you, Miles.
Speaker 3 (00:49):
Good morning herey, how are you.
Speaker 2 (00:50):
I'm very good mate. What a funny old year twenty
twenty five was, really? I mean, the prices went gangbusters
for a while and then they started to free fall.
So what was that about.
Speaker 3 (01:00):
Yeah, look, I mean it did come off the back
of what's been a couple of years of sort of
strong growth out there in the international market. So demand
was relatively strong despite I guess some of the international uncertainty,
the geopolitics in play, sort of a lack of milk
at the back end of twenty twenty four in the
international market, so all that sort of pushed those prices up.
(01:20):
But you know what they say, to solve these high
prices off. In high prices, you've seen a whole lot
more milks sort to turn up an international market at
the moment. It's putting a bit of downward pressure on
so full circle this year, I.
Speaker 2 (01:33):
Guess, so let's put down with pressure on farm gate
prices too, so because the difficulty you have is trying
to tell farmers what they're going to earn, and at
one moment you can say this number, but then suddenly
you can say another.
Speaker 3 (01:44):
Yeah, that's right. But you know, I think farmers, and
you know, we're inter generational business. Most of their farms
are being sort of handed through over generation, so they
understand sort of the ups and downs of the sort
of the commodity cycle. The pace is what I guess
catches people out. You know that the way that the
milk came on so quickly has come on so quickly
in the northern hemisphere and I guess that's sort of
called a few people out, but our farmers are prepared
(02:07):
for that. You know, they expect things to sort of
go up and down as the market moves, and so
they're well prepared for that, despite it being obviously not
not great news to drop a UK price.
Speaker 2 (02:18):
So that's dropping milk price. Is it going to rebound
anytime soon?
Speaker 3 (02:23):
Well, as I say, I think, I still think demand
is quite robust at the international market. You know, China's
sort of come off its loads of a couple of
years ago, so we're seeing good, good demand there. Supply
changes relatively when you look internationally, so you look at
some of the Middle East or Southeast Asian markets, I
think supply change is relatively so I think that put
a good base in the market. As I say, we
(02:44):
just need to see what happens with the supply. And
prices have dropped quite significant in Europe and they're starting
to slow in the US, so that should slow supply down.
So yeah, it could bounce, but which is why we
just have a range in it and our pricing for
the year ahead, just to give a bit of variability.
Speaker 2 (03:01):
Well, with that global competition so hot, how do we
maintain that we are the world's milk people.
Speaker 3 (03:09):
Yeah, well, we always have had a strong position internationally.
And you know, I think we've talked previously, ninety five
percent of our product that is made here in New
Zealand is exported, which is different from most other markets.
Most of the milk that's produced in Europe and North
America is consumed inside those territories, and so you know,
while those economies are in pretty good shape, you see
(03:31):
most of that milk consume. So we are the player
in the international market, which you know, on one side
means our price may move first as international demand picks up,
but at the same time we may also feel it
on the downside. So no, we are still very well
regarded internationally. We know the provident story, the way that
our farmers farm here in New Zunder those things resonate
with buyers. It's just when there's a bit more milk
(03:53):
in the market, you know, it's a buyer's market more
so than a sales markets.
Speaker 2 (03:57):
I always wondered if you taste it in American milk,
or European milk or an Australian milk, and then you
compare it to a New Zealand milk. Could you actually
taste the difference? I mean, can you taste the fact
that we have grass, big cattle that are making awesome milk,
the best in the world.
Speaker 3 (04:13):
When you talk I mean, the technologists will tell me otherwise.
But when you're talking liquid milk, probably not. But of
course the products we sell, our cheeses and butters and creams,
and absolutely you can tell the difference. I mean, the
way that we farm here, the pasture based system sort
of brings through the sort of the grassy notes, if
you can call it that, and those things resonate. Of course,
it's more yellow. Our products are more yellow than what
(04:34):
you get in the northern hemisphere, so those things they
do resonate with buyers that in those Asian and Middle
East An economy, So yes it does. But you know,
glass of milk, which is not really what we sell internationally,
it'd be hard to tell the difference, but those certain
ingredients you can.
Speaker 2 (04:50):
And how did you feel about the Argie barge, which
included the politicians who got into the price of milk
and New Zealand saying we make it here, we should
get the cheapest New Zealand milk anywhere in the world.
Was that understandable or was that a frustrating naive argument.
Speaker 3 (05:05):
Well, I guess we need to acknowledge that the New
Jeal economy has been under a bit of pressure this
last twelve or eighty months, and I think you mentioned
that at your outset, and so you know, it's no
question that people like us get put in the spotlight
and the questions are asked of us, and I get that.
You know, while Fontierra certainly is a big organization in
the headline number, we are really a collection of farming families.
(05:29):
I mean, they're just so happened to sit under the
Fonterira brand, but at the same time they are the
individual farming family. So it's important that we played the
international game, and you've seen that play out now with
this pricing come down, that will be reflect that I
suspect in the supermarkets in time. But ultimately, you know,
everyone's got a role to play, whether it be a consumer,
(05:50):
whether it be a politician, or whether it be us
as a producer.
Speaker 2 (05:54):
You sold your major brands, your value added brands, for
four point two billion dollars, which was very was greeted
with great thanks by farmers obviously, But the funny thing is,
for years we've had the argument that New Zealand just
exports raw product and that maybe we could make more
money if we actually had a value added product. And
here you are discarding your value added products. So what's
(06:17):
that about.
Speaker 3 (06:19):
Yeah, it's really important that people understand that this is
the business that actually has been the least return of
all our channels. So you know, we sell most of
our products through ingredients, and we talk about special ingredients
that go into maybe medical nutrition or sports an active
drink or sports drinker as you like. The second category
channel for us as food service, which is you know,
(06:40):
consuming products out of home, whether it be bakeries or
restaurants or the like. And the third channel from a
return perspective, as our consumer. So if people say you're
selling the value, it couldn't be further from the truth.
It is a least returning product because it has a
high capital cost to get product into the hands of consumers.
(07:01):
So you know, for us, it's about releasing that capital
back to both the business and our owners, leaving them
do something else with that can add a greater return
on the investment, and having us focus on, as I say,
those areas we make our most cash, which is the
ingredients business and our food service.
Speaker 2 (07:20):
Okay, so you wouldn't suggest to forestry owners that they
should stop exporting logs and start exporting cupboards.
Speaker 3 (07:28):
Well, I mean every business is different, So I clearly
couldn't comment on the forest industry because they's hitch outside
of mine. Okay.
Speaker 2 (07:34):
So this year there's been a lot of agritect news,
from fences herding of cattle, to pills that make cows
fart out less meat thane, to of course a halter
and the collar around the cattle's neck, which has been amazing.
How is technology going to change farming over the next
ten to twenty years and we as a farming community
ready for it?
Speaker 3 (07:54):
Well, I think the first thing is, yes, we are
ready for it. I think that you know, farmers have
been innovative. You know, we're one hundred and fifty odd
years as an industry now, and you don't survive through
through decades without being innovative as an industry. And so
farmers have led from the front on that and I
suspectate they'll continue to be so. So some of the
technology that you see and you refer to, then that's
coming to the fall now I think they're going to
(08:16):
be game changes. I mean, access to labor becomes more difficult.
You know, even trying to recruit recruit staff in rural
New Zealand is not easy at times. And so some
of this technology that our farms are starting to adopt
I think will be important for the years ahead. Add
to that the sustainability element. You know, we've got an
investment both industry and government, industry investment in agri ZERI
(08:38):
in New Zealand, which we've sort of targeted to try
and solve the methane challenge that industry has, and I
think again technology will come a long way to solve
in that over the next decade.
Speaker 2 (08:49):
So we're not a pig cow as yet, and we're
not a pick cow because the technology keeps making us
more efficient.
Speaker 3 (08:56):
Well, I mean it depends on how you look at that.
So you know, I think the cow numbers per se
have actually come down in New Zealand, so maybe we
have had to peak cow. But my point is that
we become more efficient, so you know, less environmental footprint
and maybe less cares for better output.
Speaker 2 (09:13):
Or good miles. Hurral. So finally, where does Myles Hurral
spend the summer, we'll both my wife and.
Speaker 3 (09:21):
I are from from christ ut so we'll spend a
few days down there with both both our parents, catching
up with them, and then probably spend some time at
the beach. It's been being ahic of a year, and
while milk still keeps coming and we're still going to
sell it, I'll take a take a week or two
off over the summer break and j with it with
my family.
Speaker 2 (09:39):
Miles Hurrell from Fonterra, I thank you so much for
your time today on the Summer Breakfast.
Speaker 3 (09:43):
Great. Thanks for much, Andrew.
Speaker 1 (09:45):
For more from News Talks B listen live on air
or online, and keep our shows with you wherever you
go with our podcast on iHeartRadio
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