Fonterra has sold its half share in Agrifeeds to its partner Wilmar International for $27.5 million, effective immediately.
It has retained the right for subsidiary Farm Source to be the exclusive seller of Agrifeeds palm kernel expeller (PKE) and PKE blends through the nationwide rural service stores.
Agrifeeds is a fertiliser and animal feeds business, based on PKE, distillers’ dried grains, maize, soybean and canola meals, molasses and supplementary minerals.
Most of these feed inputs come from the Asia-wide supply chain of Wilmar.
Wilmar International is a Singapore-based listed company with 90,000 employees worldwide in numerous subsidiaries that process and manufacture major foods for humans and animals such as sugar, edible oils and bread.
Since 2015, it has been a part owner of Goodman Fielder in New Zealand and Australia, incorporating well-known brands Edmonds, Meadow Fresh, Meadowlea, Kiwi, Huttons, Quality Bakers, Nature’s Fresh, Vogels and Puhoi Valley Cheese.
The Agrifeeds joint venture between Fonterra and Wilmar was formed in 2008 to secure the supply chain to NZ of PKE and other imported ingredients.
Farm Source director Richard Allen said the past 12 years had produced good profits and ensured a competitive animal feeds market.
“As part of a continuous review of Fonterra’s investments, we have concluded ownership of Agrifeeds is no longer necessary to ensure farmers have access to sustainably sourced and competitively priced feed,” he said.
He says the Agrifeeds sales team would continue to be employed by Wilmar and there would be no change to the services, product range and support available to Fonterra farmers.
PKE is a widely-used imported supplementary feed for dairy cows, which is criticised by climate activists as unsustainable for greenhouse gas emissions, but is a by-product of a much larger palm oil industry.
Fonterra has effectively capped PKE feeding to cattle since 2017 by grading milk composition on a fat evaluation index.