Fonterra's strengthening of its pharmaceutical offer

Federated Farmers has welcomed Fonterra Cooperative Group’s announcement it is to invest $53 million into its joint venture, DMV-Fonterra Excipients, in order to acquire FrieslandCampina Domo-Pharma – a pharmaceutical grade lactose manufacturer.

“While I know this is still subject to regulatory clearance, it is extremely positive to see Fonterra making such a strategic investment,” says Lachlan McKenzie, Federated Farmers Dairy chairperson.

“FrieslandCampina Domo-Pharma became a business unit following the 2008 mega-merger of the Dutch dairy co-operatives, Campina and Friesland Foods. This formed the world’s largest dairy cooperative - Royal FrieslandCampina.

“The cooperative spirit is such that Fonterra’s joint venture partner is actually Royal FrieslandCampina.

“Controlling a pharmaceutical grade lactose manufacturer strengthens the joint venture company, DMV-Fonterra Excipients. Excipients are inactive substances used in the manufacture of pharmaceuticals.

“Through the joint venture, Fonterra will be acquiring a company which develops, produces and markets high quality lactose used in the pharmaceutical, nutrition and food industries. This is high frontier stuff as it includes the most advanced pharmaceutical applications.

“As a cooperative, this proves Fonterra is not just capable of but is making investments that will benefit its farmer-shareholders and New Zealand as a whole.

“It also helps that Fonterra Cooperative Group, the world’s largest dairy exporter, has an active joint venture with the world’s largest dairy cooperative, Royal FrieslandCampina.

“Our Government has to recognise that the cooperative model is a valid but unheralded third-way for economic development. This fixation with trying to list Fonterra ignores the fact it has a business model that actually works.

“You don’t have to be a listed company to have good management and governance as farmers have consistently proved. That’s why Fonterra is New Zealand’s largest corporate and by some margin too,” Mr McKenzie concluded.