Chasing Emerging Markets

“When you are the world’s biggest exporter in a sector powered by Asia’s high-octane economies, it is not difficult to find opportunities for growth,” Kevin Brown writes for the Financial Times. “Fonterra, the New Zealand co-operative that has a third of the world’s dairy trade, has found plenty. It is pushing into emerging markets in China and south-east Asia, and energetically exploring ventures in India and the Middle East. But Fonterra’s ambitious managers have a problem: the 1,5 conservative farmers who own the company are deeply reluctant to allow it to access substantial outside capital for expansion. Without a dramatic change in that attitude, New Zealand’s biggest company is unlikely to fulfil its enormous international potential. Agricultural demand is forecast by the UN’s Food and Agriculture Organisation to rise 7 per cent by 25. Fonterra chief executive Andrew Ferrier says China’s dairy market alone will increase from about $25bn to $72bn by 22. Fonterra, with its efficient production and healthy New Zealand image, is well placed to take advantage of these trends, especially if it can use its ‘cow to consumer’ skills to establish farms and supply chains close to sources of demand.”