15 Feb 2009

Fonterra stockpiles milk powder

3:58 pm on 15 February 2009

Fonterra is stockpiling milk solids, as a global economic downturn lowers demand for dairy products.

The United States government is stockpiling milk powder in limestone caves, but Fonterra says it has different reasons for what it's doing.

Fonterra's commercial director of global trade Guy Roper says the need for storage space in New Zealand is due to a drop in global demand.

But he says the US government is stockpiling milk powder from farms there for protectionist reasons.

Mr Roper says the extra storage costs have already been factored into the latest forecast payout.

A large commercial property firm contracted to find warehouse space for Fonterra says the company has leased 43,000 square metres of warehouse space, mostly in South Auckland.

Collier International says it's the first time it's had to find such a large amount.

It says finding vacant warehouses has not been a problem because many large premises are empty.