August 27, 2024 • 5 mins
Global Sector Strategist for Dairy in the RaboResearch team, Mary Leadman joins Hamish McKay to discuss how the top 20 dairy companies are looking worldwide
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Episode Transcript
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Speaker 1 (00:00):
Well, it is coming up to thirteen minutes away from seven.
The Global Dairy Top twenty report from Rabobank has revealed
a year of modest gains and strategic shifts within the
dairy sector now. The report analyzes the financial performance of
the world's leading dairy companies. Of course, New Zealand is
amongst that. Francis Lactalis remains at number one. They're slate
(00:24):
Dairy Farmers of America Fontira is up three places. To
discuss this, we're joined by Mary Ledman out of the US. Mary,
welcome to the show.
Speaker 2 (00:34):
Thank you, it's great to be on with you this morning.
Speaker 1 (00:37):
Great, right, Ok, we've seen a zero point three percent
decrease in combined turnover this year compared to eight point
one growth last time.
Speaker 3 (00:45):
It's a fairly drastic sort of difference. What's caused this?
Speaker 2 (00:50):
Yeah, that is a big difference here, this eight percent
decline or I should say in dollars term, right, so
you know, really what happened here. We had lower milk
prices in twenty twenty three versus twenty twenty two, and
this was a real you know, driver of this very
modest growth of just zero point three percent in US
(01:10):
dollars terms.
Speaker 3 (01:13):
Okay, so what does it mean overall?
Speaker 1 (01:16):
If I'm looking from a New Zealand perspective, what are
the rankings made off for Fontier to have gone at
three places?
Speaker 2 (01:26):
Right? So, you know, Fontier made an impressive three you
know rankings improvement and that's including some of the divestments
that they had already made. So the New Zealand dollar
versus the US dollar was an improvement. And New Zealand's
year end there, Fontiers, your end is July thirty first,
(01:50):
and so those results don't fully bake in those lower
commodity prices in the second half of twenty twenty three
that we saw some of the other companies realize because
of their year end being December thirty first. But you know,
Fontire really showed impressive growth in the ranking.
Speaker 1 (02:10):
Yeah, where in the world is doing based and the
dairy seek there at the moment, who's leading the why?
Speaker 2 (02:18):
Well, you know, lap Chalice is a family owned company
and they have really shown tremendous growth in positioning, not
just in the recent year, but I would say even
just strategically over the five the last five to ten years.
When they see a property that they want to buy
(02:39):
they just go out and do it right. And it's
not a publicly traded company, it's not a cooperative, it's
a family owned company, and they're able to make those
decisions quite swiftly, not.
Speaker 1 (02:49):
A lot of rig type or paperwork to go through
the intellect tylers. So that must be quite an advantage.
Speaker 2 (02:56):
I think it is an advantage as well as you know,
not having like a publicly treated company shareholders expectations and
trying to meet quarterly earnings.
Speaker 3 (03:07):
Mary, how would you describe Fontierra?
Speaker 1 (03:10):
Because you know, I've been from a broadcasting since seven
or eight years. I've been covering this off and on
now and Miles Harrel came into.
Speaker 3 (03:20):
A bit of a storm. But I would have thought that.
Speaker 1 (03:22):
Fontierra has well settled down and seems to be sort of,
you know, treading a fairly good course.
Speaker 2 (03:29):
Now, I think that's really an accurate description. I think
they're finding right, sizing right, looking at what milk production
growth they anticipate over the next decade and how to
valueize that at the highest potential.
Speaker 3 (03:44):
Yeah, okay, interesting in terms of where is most affected
by the lower milk prices we've been seeing.
Speaker 2 (03:55):
Wow, that's a tough question because you know we've had
volatility on the global market that I would say that
on the producer community, those that have been impacted the
most have been dairy farmers that have not had risk
management and plants in place that have protected them from
(04:18):
the downside of milk prices or the high side of
feed prices. Fortunately, that margin squeeze is really in kind
of our rear view mirror. I know that prices are
adjusting in New Zealand and Australia, but from fairly from
fairly high levels, and so what's really helping the Oceania
(04:41):
farmers also is some lower feed cost right, so we
do see some margin improvement. Probably the biggest and negative
is interest rates, right, they've elevated in the last twelve
to eighteen months, and that's a key component in the
cost production of a New Zealand very farmer. Compared to
a US dairy farmer, their highest cost of production is
(05:03):
their feed costs and that's going down in twenty twenty four.
Speaker 3 (05:07):
Yeah, yeah, yeah, I guess Mary.
Speaker 1 (05:10):
To wrap it up, volatility and the global dairy will
almost pretty much go hand in hand.
Speaker 2 (05:17):
That is a fair statement, very very true.
Speaker 3 (05:20):
Great, thank you very much for joining us. Mary, Leedman.
Speaker 1 (05:22):
They're out of the US with the Rabobank Global Dairy
Top twenty. Yes, those interest rates are a killer. I mean,
if you're a farmer who can has got everything your
ducks in a row and can produce at around sort
of four dollars or five dollars even under five dollars
a kilogram with it where the payouts is, you're looking okay.
The dollar is not too bad. But if you're not
(05:43):
in that zone and you're having to pay some of
these ridiculously high farmer interest rates, you have got a
little bit.
Speaker 3 (05:51):
On your plate. Seven minutes away from seven
Well, it is coming up to thirteen minutes away from seven.
The Global Dairy Top twenty report from Rabobank has revealed
a year of modest gains and strategic shifts within the
dairy sector now. The report analyzes the financial performance of
the world's leading dairy companies. Of course, New Zealand is
amongst that. Francis Lactalis remains at number one. They're slate
(00:24):
Dairy Farmers of America Fontira is up three places. To
discuss this, we're joined by Mary Ledman out of the US. Mary,
welcome to the show.
Speaker 2 (00:34):
Thank you, it's great to be on with you this morning.
Speaker 1 (00:37):
Great, right, Ok, we've seen a zero point three percent
decrease in combined turnover this year compared to eight point
one growth last time.
Speaker 3 (00:45):
It's a fairly drastic sort of difference. What's caused this?
Speaker 2 (00:50):
Yeah, that is a big difference here, this eight percent
decline or I should say in dollars term, right, so
you know, really what happened here. We had lower milk
prices in twenty twenty three versus twenty twenty two, and
this was a real you know, driver of this very
modest growth of just zero point three percent in US
(01:10):
dollars terms.
Speaker 3 (01:13):
Okay, so what does it mean overall?
Speaker 1 (01:16):
If I'm looking from a New Zealand perspective, what are
the rankings made off for Fontier to have gone at
three places?
Speaker 2 (01:26):
Right? So, you know, Fontier made an impressive three you
know rankings improvement and that's including some of the divestments
that they had already made. So the New Zealand dollar
versus the US dollar was an improvement. And New Zealand's
year end there, Fontiers, your end is July thirty first,
(01:50):
and so those results don't fully bake in those lower
commodity prices in the second half of twenty twenty three
that we saw some of the other companies realize because
of their year end being December thirty first. But you know,
Fontire really showed impressive growth in the ranking.
Speaker 1 (02:10):
Yeah, where in the world is doing based and the
dairy seek there at the moment, who's leading the why?
Speaker 2 (02:18):
Well, you know, lap Chalice is a family owned company
and they have really shown tremendous growth in positioning, not
just in the recent year, but I would say even
just strategically over the five the last five to ten years.
When they see a property that they want to buy
(02:39):
they just go out and do it right. And it's
not a publicly traded company, it's not a cooperative, it's
a family owned company, and they're able to make those
decisions quite swiftly, not.
Speaker 1 (02:49):
A lot of rig type or paperwork to go through
the intellect tylers. So that must be quite an advantage.
Speaker 2 (02:56):
I think it is an advantage as well as you know,
not having like a publicly treated company shareholders expectations and
trying to meet quarterly earnings.
Speaker 3 (03:07):
Mary, how would you describe Fontierra?
Speaker 1 (03:10):
Because you know, I've been from a broadcasting since seven
or eight years. I've been covering this off and on
now and Miles Harrel came into.
Speaker 3 (03:20):
A bit of a storm. But I would have thought that.
Speaker 1 (03:22):
Fontierra has well settled down and seems to be sort of,
you know, treading a fairly good course.
Speaker 2 (03:29):
Now, I think that's really an accurate description. I think
they're finding right, sizing right, looking at what milk production
growth they anticipate over the next decade and how to
valueize that at the highest potential.
Speaker 3 (03:44):
Yeah, okay, interesting in terms of where is most affected
by the lower milk prices we've been seeing.
Speaker 2 (03:55):
Wow, that's a tough question because you know we've had
volatility on the global market that I would say that
on the producer community, those that have been impacted the
most have been dairy farmers that have not had risk
management and plants in place that have protected them from
(04:18):
the downside of milk prices or the high side of
feed prices. Fortunately, that margin squeeze is really in kind
of our rear view mirror. I know that prices are
adjusting in New Zealand and Australia, but from fairly from
fairly high levels, and so what's really helping the Oceania
(04:41):
farmers also is some lower feed cost right, so we
do see some margin improvement. Probably the biggest and negative
is interest rates, right, they've elevated in the last twelve
to eighteen months, and that's a key component in the
cost production of a New Zealand very farmer. Compared to
a US dairy farmer, their highest cost of production is
(05:03):
their feed costs and that's going down in twenty twenty four.
Speaker 3 (05:07):
Yeah, yeah, yeah, I guess Mary.
Speaker 1 (05:10):
To wrap it up, volatility and the global dairy will
almost pretty much go hand in hand.
Speaker 2 (05:17):
That is a fair statement, very very true.
Speaker 3 (05:20):
Great, thank you very much for joining us. Mary, Leedman.
Speaker 1 (05:22):
They're out of the US with the Rabobank Global Dairy
Top twenty. Yes, those interest rates are a killer. I mean,
if you're a farmer who can has got everything your
ducks in a row and can produce at around sort
of four dollars or five dollars even under five dollars
a kilogram with it where the payouts is, you're looking okay.
The dollar is not too bad. But if you're not
(05:43):
in that zone and you're having to pay some of
these ridiculously high farmer interest rates, you have got a
little bit.
Speaker 3 (05:51):
On your plate. Seven minutes away from seven
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