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Speaker 1: Fontira has agreed to one off, if not the biggest

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Speaker 1: sale in the country's history. French food group Lacdalise has

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Speaker 1: agreed to pay three point eight four five billion dollars

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Speaker 1: for the consumer business, including brands like Anchor and Mainland

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Speaker 1: Fonterra's share prices shot up nearly twenty percent today. Chief

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Speaker 1: executive is Miles Harrel High Miles afternoon of that, So

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Speaker 1: when did you guys wrap up the deal?

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Speaker 2: Very early hours this morning. It's been a long, long

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Speaker 2: couple of days for the team. But you're great, great

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Speaker 2: to put pen to paper early hour this morning here.

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Speaker 1: Yeah, were you pleased to hear it when you when

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Speaker 1: you heard the final number?

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Speaker 2: Yes, we were. I mean we've been, as I say,

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Speaker 2: working some long days to get to this point. There's

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Speaker 2: always a lot of detail behind the number itself. But

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Speaker 2: now really please, and of course please it to go

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Speaker 2: to a company like Lackdalise that have strong presence, global presence,

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Speaker 2: that we can work collectively with.

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Speaker 1: Do you reckon the farmers are going to sign off

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Speaker 1: on it?

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Speaker 2: Well, I mean, ultimately it's their call, but but I

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Speaker 2: think you know it's a number that you know above

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Speaker 2: the expectations as you say, and the fact that we're

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Speaker 2: already announced that we'll go out with a two dollars

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Speaker 2: capital return to our I think those things will help.

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Speaker 2: I mean there's a lot of emotional connections to these brands,

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Speaker 2: not just used it in public, but our farmers as well.

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Speaker 2: So yeah, they'll ask those questions and we'll be out

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Speaker 2: talking to them. But at this point, the feedback I've

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Speaker 2: had for farmers has all been positive.

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Speaker 1: It's been estimated that the average dairy farmer in the

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Speaker 1: White Cuttle we get about four hundred thousand dollars from it.

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Speaker 1: Is that about right?

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Speaker 2: Yeah, that's about right. You know, it depends on farmers

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Speaker 2: that are significantly bigger than that, of course, and others

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Speaker 2: on the other side, but yeah, that's about an average farmer.

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Speaker 1: I think, yeah, Trush, well I would say yes to that,

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Speaker 1: wouldn't you.

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Speaker 2: Well, yeah, of course. But it's a capital return, so

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Speaker 2: it's not like it's fallen from the sky. This is

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Speaker 2: capital I've had invested in the cop for a number

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Speaker 2: of years, and so they are the questions that they ask.

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Speaker 2: But you know, it comes back to, you know, what

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Speaker 2: we've decided as a cooperative that we're going to go

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Speaker 2: after it's that ingredients business, that's food service, and we

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Speaker 2: believe that's where the returns are not just for now,

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Speaker 2: but into the long term, and so I think they'll

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Speaker 2: support that.

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Speaker 1: Part of the deal is a long term agreement for

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Speaker 1: Fonterra to sell milk and ingredients to these guys. How

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Speaker 1: long is that.

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Speaker 2: For, Well, they vary depending on sort of what products

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Speaker 2: we're talking about, but you know we've talked about the

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Speaker 2: fresh milk agreement which goes into sort of the ankor

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Speaker 2: two leaders. As we'll all know, there's a ten year

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Speaker 2: agreement behind that. So you know they're here for the

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Speaker 2: long term and our farmers should be pleased with that,

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Speaker 2: as should the New zeald public.

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Speaker 1: Part of the criticism of this is that you're backing

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Speaker 1: away from value added products, which we have for the

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Speaker 1: longest time being told is the key to New Zealand's

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Speaker 1: economic future. What's your response to that criticism.

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Speaker 2: Well, we have three key channels, you know, the food

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Speaker 2: service that out of home consumption that you buy in

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Speaker 2: a restaurant or a bakery, and the ingredients business and

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Speaker 2: the consumer which you buy in the supermarket. Those three

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Speaker 2: channels for since the cooperative formation in two thousand and one.

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Speaker 2: That has been the lowest performing channel for a long time.

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Speaker 2: And so you know, there be a variety of reasons.

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Speaker 2: That is an expensive business to maintain. You've got to

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Speaker 2: continue to invest in it, and so there are probably

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Speaker 2: some reasons behind it. But we've shown for a long

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Speaker 2: time that our core business of collection, process and ingredients

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Speaker 2: and that food service business you knows, above the cost

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Speaker 2: of capital for our farmer owners, and that's for therefore

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Speaker 2: that's will put out our investment going forward.

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Speaker 1: So now that you're getting rid of this particular part

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Speaker 1: of the business, where do you focus your energy more intently?

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Speaker 2: Yeah, so it's that advanced ingredients, you know, and you've

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Speaker 2: got you know the developed economies of North America, Europe,

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Speaker 2: which are Japan career, which are spinning more on health

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Speaker 2: and wellness, and that's right in our wheelhouse. So that's

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Speaker 2: where we will go. And of course you know China

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Speaker 2: and Asia Pacific around that out of home consumption, so

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Speaker 2: you know, bakeries, restaurant chains, fast food is a huge

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Speaker 2: market still to be tapped in that rule.

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Speaker 1: Well, isn't the argument here, Miles, actually that the advanced

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Speaker 1: ingredients is actually value added? Chopping up a block of

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Speaker 1: butter and sticking a wrapper on it is not really

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Speaker 1: value added.

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Speaker 2: Well, that's that's sort of the argument. There's not a

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Speaker 2: lot of science that goes into into a block of butter.

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Speaker 2: That that's the you know, we pride ourselves in the

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Speaker 2: way we farm and the taste profile and the functionality.

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Speaker 2: But you know that the ip that sits in behind

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Speaker 2: you know, a sports drenth for for athletes or not

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Speaker 2: even athletes these days, but you know that the Joe

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Speaker 2: public that's out there going for a run or a

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Speaker 2: bike ride. I mean the science that goes into some

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Speaker 2: of those proteins. That that's what we believe our futures

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Speaker 2: and as I say, that's where the value is for

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Speaker 2: us now and into the future.

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Speaker 1: So is it too early to crack a bottle of champagne?

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Speaker 2: Yeah, I've got a few more media calls to do

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Speaker 2: for the rest of the evening and Pharmer calls are

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Speaker 2: in fat lad into the night, So too early for that,

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Speaker 2: but we'll see what the weekend holds.

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Speaker 1: Good for you, Miles, Enjoy it. Myles Hurrell, chief executive

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Speaker 1: at Fonterra. For more from Hither Duplessy Allen Drive, listen

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Speaker 1: live to news talks.

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Speaker 2: It'd be from four pm weekdays, or follow the podcast

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Speaker 2: on iHeartRadio