Fonterra, in a response statement, said reasons for the shrinkage included consolidation of farm ownership by mergers and amalgamations, farms moving to alternative land uses and farms switching to other dairy processors.
Farmer-owner watchdog, the Fonterra Cooperative Council, agreed these were the reasons for the steady fall.
Chairman John Stevenson: “Clearly we have fewer shareholding farmers participating in the co-op, but the key thing for us is that the Fonterra board has come out and acknowledged that in New Zealand, we have flat to declining milk, and that was part of the reason for the introduction of the flexible shareholding structure.”
The capital restructure was implemented earlier this year and makes it easier and cheaper for farmers to join the world’s ninth-biggest dairy company, which requires them to buy shares to supply milk.
Stevenson said the council’s “key concern” was Fonterra’s percentage of market share, as opposed to the number of shareholder farms that supplied the company.
“The market share is really important, and we are really clear in our letter of expectation [to the board] that an expectation we have of Fonterra as owners and representatives is that Fonterra is the milk processor of choice and that it is important for us to remain an enduring, intergenerational co-operative.”
In 2019, Fonterra collected 17.1b litres of milk. As at May this year it had collected 16.3b litres.
Last season, its milk collection on a milk solids basis lifted slightly on the previous year.
To put Fonterra’s 79 per cent raw milk market share in context, DairyNZ said in the 2021-2022 dairy season, there were 4.84 million cows in New Zealand, down 1.26 per cent on the previous season. There were 10,796 herds.
Nearly 71 per cent of those herds were in the North Island and 54 per cent of all herds had fewer than 400 cows.
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.