Dairy Foods strikes deal with Fonterra

By Graeme Hunt

Friday 19th October 2001

New Zealand Dairy Foods has struck a deal with dairy giant Fonterra Co-op Group to buy raw milk and other ingredients at the same price as Fonterra subsidiary Mainland.

The 10-year agreement, signed this week, allows Dairy Foods to compete on the same basis as Mainland. It covers raw milk, cream, butter and cheese as well as the licensing of the Chesdale cheese brand. Licensing agreements for the Anchor and Fernleaf brands were signed earlier this year.

Dairy Foods chief executive Peter McClure said the company would now be able to plan better by knowing the real cost of raw milk.

"The previous situation of retrospective pricing for raw materials was hopeless and cost us dearly," he said in a statement.

Dairy Foods is 50% owned by New Zealand Dairy Group and 50% by 6500 North Island farmer-shareholders.

New Zealand Dairy Group is obliged to sell its holding as part of its merger with Kiwi Co-op Dairies and the Dairy Board that created Fonterra.

The chief executive of independent dairy company Westland Milk Products, Terry Norwood, has quit to "take up new challenges."

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