1
00:00:00,120 --> 00:00:01,840
Speaker 1: I mean, apart from the Greens, it seems we're all

2
00:00:01,880 --> 00:00:04,480
Speaker 1: celebrating the Fonterra result net profit a bit over a

3
00:00:04,480 --> 00:00:06,840
Speaker 1: billion dollars sixteen billion in cash returns to the farm's

4
00:00:06,880 --> 00:00:10,399
Speaker 1: final farm gate ten dollars sixteen forecast looks good as well.

5
00:00:10,400 --> 00:00:12,520
Speaker 1: Peede McBride is the chairman of Fontira and as well

6
00:00:12,520 --> 00:00:16,520
Speaker 1: as Peter good morning, Mike very Well. Indeed, Wayne Langford

7
00:00:16,520 --> 00:00:18,720
Speaker 1: of fed Farmer says this is the new normal. Is

8
00:00:18,720 --> 00:00:19,680
Speaker 1: he bullish or right?

9
00:00:20,960 --> 00:00:23,919
Speaker 2: Well? Both? Well, I guess he's an optimist as a

10
00:00:23,960 --> 00:00:25,160
Speaker 2: farmers anyway.

11
00:00:25,280 --> 00:00:27,000
Speaker 1: I guess so. But I mean, do you see but

12
00:00:27,360 --> 00:00:31,080
Speaker 1: it just keeps on keeping on at ten plus, not

13
00:00:31,240 --> 00:00:33,400
Speaker 1: only out of this last season, but forecast for the

14
00:00:33,640 --> 00:00:35,760
Speaker 1: next season. When does it end? And if it does end,

15
00:00:35,840 --> 00:00:37,279
Speaker 1: how well?

16
00:00:37,320 --> 00:00:39,000
Speaker 2: We don't know when it ends. I guess it's a

17
00:00:39,040 --> 00:00:42,479
Speaker 2: function of global supply and demand. But certainly we're doing

18
00:00:42,520 --> 00:00:45,160
Speaker 2: our best to maintain these sort of levels.

19
00:00:45,600 --> 00:00:47,479
Speaker 1: What is your sense of the demand side of it?

20
00:00:47,560 --> 00:00:50,160
Speaker 1: I mean, does the world will it forever? This whole

21
00:00:50,200 --> 00:00:52,320
Speaker 1: middle class. I've got some money, so I want quality

22
00:00:52,400 --> 00:00:55,000
Speaker 1: food thing. Will that continue to grow forever or not?

23
00:00:55,960 --> 00:00:58,320
Speaker 2: Yeah? Our perspective of that continues to grow on a

24
00:00:58,840 --> 00:01:01,560
Speaker 2: NOTT of two percent, and in particularly in Asia, which

25
00:01:01,600 --> 00:01:06,520
Speaker 2: is in our wheelhouse, we're seeing global supply at lucks

26
00:01:06,600 --> 00:01:10,280
Speaker 2: of Latin America increasing. The US can turn volume on

27
00:01:10,480 --> 00:01:13,319
Speaker 2: quite quickly, but we are seeing downward pressure in Europe.

28
00:01:13,840 --> 00:01:16,840
Speaker 2: So you know, molk finds us equilibrium, it finds a home.

29
00:01:17,040 --> 00:01:20,640
Speaker 2: But I think overall we're in a pretty good space.

30
00:01:21,160 --> 00:01:24,120
Speaker 1: Your sense of the debt vspin story. A lot of

31
00:01:24,120 --> 00:01:26,039
Speaker 1: people text me saying, Oh, it's not that good because

32
00:01:26,080 --> 00:01:27,319
Speaker 1: the farm is only going to go to the bank

33
00:01:27,400 --> 00:01:28,600
Speaker 1: and repay debt. Is that true?

34
00:01:29,600 --> 00:01:31,600
Speaker 2: No, I think it'll be a danced approach. I think

35
00:01:31,760 --> 00:01:34,400
Speaker 2: you know, this year there'll be debt reduction, There'll be

36
00:01:34,440 --> 00:01:37,880
Speaker 2: a lot of deferred maintenance, there'll be machinery replacements, there

37
00:01:37,920 --> 00:01:41,600
Speaker 2: will be spend in regional economies. I think two years

38
00:01:41,640 --> 00:01:44,959
Speaker 2: of this becomes more discretionary, and then the capital they

39
00:01:45,040 --> 00:01:48,520
Speaker 2: get back from the consumer divestment process will be more discretionary.

40
00:01:48,600 --> 00:01:52,240
Speaker 1: Gain your sense of the break even point eight dollars

41
00:01:52,280 --> 00:01:54,040
Speaker 1: I can't remember the number. The other day, take dollars

42
00:01:54,040 --> 00:01:56,920
Speaker 1: sixty something? Is that too much debt? I mean, if

43
00:01:56,920 --> 00:01:59,800
Speaker 1: you're needing ten to really get some coin in the

44
00:02:00,240 --> 00:02:02,200
Speaker 1: I mean, is there too much debt floating about on.

45
00:02:02,200 --> 00:02:06,400
Speaker 2: The farm, Yeah, Parley, But it's also farmer's cost structures,

46
00:02:06,440 --> 00:02:08,520
Speaker 2: and there's a big belcove out there, so you'll find

47
00:02:08,600 --> 00:02:13,840
Speaker 2: farmers with costs significantly lower than that, not just debt,

48
00:02:13,919 --> 00:02:17,440
Speaker 2: but operating costs. So it's about farm systems that you're approaching.

49
00:02:17,560 --> 00:02:20,160
Speaker 2: So the risk here is that you lock yourself into

50
00:02:20,200 --> 00:02:23,079
Speaker 2: a high cost struction when it hits south and you're

51
00:02:23,120 --> 00:02:23,720
Speaker 2: less stranded.

52
00:02:24,000 --> 00:02:26,720
Speaker 1: Explain to people who aren't on the farm this quality story.

53
00:02:26,720 --> 00:02:30,600
Speaker 1: When you're dealing with bulk ingredients, do we sell something

54
00:02:30,680 --> 00:02:33,440
Speaker 1: that's New Zealand ink that is high quality or is

55
00:02:33,520 --> 00:02:34,440
Speaker 1: milk just milk?

56
00:02:35,560 --> 00:02:38,480
Speaker 2: No, we do sell advanced ingredients, which is one of

57
00:02:38,560 --> 00:02:41,519
Speaker 2: our high well it is our highest ending category. So

58
00:02:42,080 --> 00:02:44,920
Speaker 2: you think about protein in the shape or our tds

59
00:02:45,080 --> 00:02:48,799
Speaker 2: like the fitness folk into or for aged here in

60
00:02:48,880 --> 00:02:52,360
Speaker 2: particular for rehabilitation. You know, there's a lot of value

61
00:02:52,400 --> 00:02:53,600
Speaker 2: in those high value proteins.

62
00:02:53,880 --> 00:02:56,119
Speaker 1: Good the brand sale that you work at, you still

63
00:02:56,160 --> 00:02:58,240
Speaker 1: working on that. I would have thought that's foregone conclusion

64
00:02:58,280 --> 00:02:58,600
Speaker 1: by now.

65
00:02:59,480 --> 00:03:01,040
Speaker 2: Now it's still and I know we've got a week

66
00:03:01,080 --> 00:03:02,880
Speaker 2: on the road with farmers this week they're going to

67
00:03:03,160 --> 00:03:07,079
Speaker 2: have a much more informed conversation. Up until now we're

68
00:03:07,120 --> 00:03:08,880
Speaker 2: being limited what we could say about it, or we

69
00:03:08,880 --> 00:03:11,440
Speaker 2: could talk about the why divist consumer, But now they've

70
00:03:11,480 --> 00:03:13,040
Speaker 2: got a bunch of numbers to look at it more

71
00:03:13,120 --> 00:03:15,000
Speaker 2: rational for the decision.

72
00:03:15,240 --> 00:03:17,600
Speaker 1: Okay, and the Greens I noted yesterday were saying what

73
00:03:17,680 --> 00:03:19,519
Speaker 1: we really need to do in this country, Peter is

74
00:03:19,560 --> 00:03:23,360
Speaker 1: move away from cows. Apart from the Greens. Does anybody

75
00:03:23,440 --> 00:03:23,720
Speaker 1: think that?

76
00:03:26,440 --> 00:03:28,280
Speaker 2: No one that I make us thinks that. I think

77
00:03:28,520 --> 00:03:31,080
Speaker 2: Dearie is a critical part of the New Zealand economy

78
00:03:31,120 --> 00:03:34,200
Speaker 2: as agriculture, and I think if the government wants to

79
00:03:34,480 --> 00:03:36,360
Speaker 2: drive the New Zealand economy, they're not going to do

80
00:03:36,440 --> 00:03:38,240
Speaker 2: it without growing diary exactly.

81
00:03:38,440 --> 00:03:41,400
Speaker 1: Well, congratulations on the result. We appreciate time. Peter McBride,

82
00:03:41,400 --> 00:03:42,600
Speaker 1: who's the v Frontier at chairman.

83
00:03:43,080 --> 00:03:45,960
Speaker 2: For more from the Mic Asking Breakfast, listen live to

84
00:03:46,120 --> 00:03:46,640
Speaker 2: news talks.

85
00:03:46,640 --> 00:03:49,800
Speaker 1: It'd be from six am weekdays, or follow the podcast

86
00:03:49,880 --> 00:03:50,720
Speaker 1: on iHeartRadio.