Fonterra posts €110m loss
The largest dairy exporter in the world has released poor annual results amid declining profitability and leadership shake-ups.

New Zealand's largest milk processor, Fonterra, has published accounts showing a €110m net loss after tax for the 2018 financial year. According to local media reports, this is the first loss in the co-op's 17-year history.

The bad result results from a combination of falling profitability, with Fonterra's EBIT falling by 22% in the past year, and exceptional charges related to its overseas partners.

The co-op wrote €247m off the value of its Chinese subsidiary, Beingmate, and paid Danone €131m in compensation for a past food safety scare.

Rising costs

Chief executive Miles Hurrell reported rising costs across the business, from an increase in the farmgate milk price late in the last season – which he said was good to co-op members – to other ingredient, development and support costs.

"There are no two ways about it. These results are disappointing," he wrote in Fonterra's annual report.

The bad result are a consequence of falling profitability and exceptional charges

Chair John Monaghan added that "Beingmate's unacceptable performance over the year has been frustrating".

Fonterra also faced the departure of both its former chief executive Theo Spierings and chair John Wilson in the past financial year.

Russian beef giant moves into lamb industry
The first batch of lambs have been slaughtered at the Miratorg factory in Bryansk, Oblast, Russia.

Beef giant, Miratorg, has processed its first 4,000t of lamb as part of its venture into the sheep industry.

The sheep were reared on a pilot farm with the capacity for 50,000 head, Global Meat News reports.

Miratorg is run by the Linnikov brothers who are Russia’s biggest farmers. They started out in the pig and poultry industries, only forming the fully integrated beef operation in 2006.

Most of Miratorg’s beef operations are centred around Bryansk, which is 550km southwest of Moscow.

The new venture into lamb was announced in October 2018. The company plans to invest €368m in the project by 2023, keep 1.3m sheep across 12 farms and produce 71,200t of sheepmeat per year.

Most of Miratorg’s beef operations are centred around Bryansk, which is 550km southwest of Moscow

“We evidenced a strong demand among consumers for this type of product and, in future, plan to open several other sheep breeding farms in the black earth region,” said Miratorg president Viktor Linnik.

“The expansion of the pilot project would increase both the economic and physical availability of this type of meat for Russian consumers, and would improve the export potential of Russia’s meat industry.”

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BSE case identified in Poland
Polish authorities have notified an atypical case of BSE in the west of the country.

The first case of BSE in Poland since 2013 was found in an herd of 50 cattle at the end of January in Mirsk near the Czech border, the World Organisation for Animal Health (OIE) has revealed.

According to the report filed by Poland's ministry of agriculture, a suspected case detected in an animal on 24 January was confirmed one week later by the National Veterinary Research Institute.

The animal was killed and disposed of. As with most atypical cases, the cause of infection was unknown.

Negligible risk status

"This event does not have any influence on official BSE risk status recognition of Poland," the OIE commented.

"For the purposes of official BSE risk status recognition, BSE excludes 'atypical BSE' as a condition believed to occur spontaneously in all cattle populations at a very low rate."

Poland enjoys negligible BSE risk status, the lowest risk level under OIE rules. Ireland has controlled risk status.

Leading beef exporter

Poland is one of the EU's leading beef exporters, largely from its dairy herd. In the crucial UK market, Polish beef is the third largest volume supplier with nearly 16,000t shipped over the first 11 months of last year, behind the Netherlands (18,000t) and Ireland (190,000t).

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Fonterra's John Wilson dies
The former chair of New Zealand's largest dairy co-op has passed away.

One of the world's most prominent dairy farmers, New Zealander John Wilson, died this Monday aged 54.

He was chair of Fonterra, the largest global dairy exporter, from 2012 until his resignation over poor health last July.

From his farm in the Waikato region and a second dairy business he co-owned in South Canterbury, Wilson represented farmers at various levels in Fonterra, including during its foundation through the amalgamation of several co-ops in 2001. As chair, he oversaw expansion and international joint venture developments, followed by the crisis of the 2015-2016 global milk price crash.

Until his death, he was listed as chair of Fonterra's governance development committee, which has been working on farm succession.

'Solutions, not problems'

In a message to members, his successor as Fonterra chair John Monaghan said that Wilson was survived by his wife Belinda and four daughters.

"He always looked ahead and focused on finding a way through tough times that would protect Fonterra's farmers, share-milkers and their families," Monaghan said. "Bringing farmers solutions, not problems, was always his mindset."

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