Fonterra Australia has recorded a drop of 12 per cent in milk collection, according to the 2019-20 financial results of its New Zealand counterpart.
The drop in milk collection to 107.8 kg of milk solids was caused by a combination of drought, high on-farm input costs and a highly competitive milk supply market.
Sales volumes for Australian Ingredients, the ingredients channel within Fonterra Australia, also declined by 18 per cent, due to the drop in milk collection.
It wasn’t all bad news, with the ingredients channel’s gross profit increasing from $10 million to $31 million due to reduced costs as a result of closing the Dennington site, better utilisation of the Stanhope site and allocating more milk to higher returning cheddar and mozzarella products rather than the lower returning liquid and whole milk powder products.
The Stanhope site was also leading the way in the company’s attempts to reduce water use by 30 per cent.
“This year we reduced water use at our sites, in water constrained regions, by 6.4 per cent, which is a 3.1 per cent reduction against our 2018 baseline and a significant step towards our 30 per cent reduction target by 2030,” the report said.
“Our Stanhope site delivered most of the improvement, installing new treatment infrastructure which has significantly reduced the water it uses.”