2 Sep 2013

Fonterra rejects claims of premium loss

1:23 pm on 2 September 2013

Prices have remained high at the two Global Dairy Trade auctions since Fonterra incorrectly announced its product was contaminated with bacteria that could cause botulism, but some analysts have suggested the premium Fonterra commanded over other companies is being eroded.

Specialist agribusiness news site Agrimoney says buyers are turning to lower-priced alternatives from India's Amul and the United States' DairyAmerica.

It cited Fonterra's premium on skim milk powder falling from 20% over Dairy America before the scare to just 5% at the last auction.

However, Fonterra chairman John Wilson does not believe his company is losing its premium.

He says he was quite intrigued by what he called the "sketchy" analysis.

Mr Wilson says the company commands a different premium from week to week and month to month, as there are different supply and demand drivers for different product lines.

He says Fonterra is seeing as strong a demand as it has ever seen for its products over the last week to 10 days.