Fonterra cut 700 jobs

- Last updated on GMT

Related tags: New zealand, Milk, Fonterra

Fonterra, New Zealand's leading dairy exporter, said on Monday that
it plans to axe hundreds of jobs in order to streamline its
business for future core efficiency. Over the next two years the
group plans to cut 700 administrative jobs the group's chairman
disclosed, writes Danny Vincent.

The group said that in the next two years 3.5 per cent of its 20,000 worldwide workforce will be axed so that the company can focus more directly on its core business and to cut costs.

The majority of job cuts will be made in New Zealand, and the company said that the farmer owned group will be in a better position following the restructuring.

"This is within our long term strategy...this is really the reason why we put Fonterra together",​ Van der Heyden, from Fonterra told National Radio in New Zealand, "it really makes us focus on efficiencies all the way from cow to consumer"​, he said.

The company carried out a comprehensive review of its operations earlier in the year. The group claim that the move to cut jobs is part of its long term activities and is not solely influenced by the strengthened New Zealand dollar.

"Dairy farmers need improved returns. When Fonterra was created it is set out to cut duplication and reduce administration. Fonterra's centralisation was designed to deliver greater efficiency. Altrhough redundancies are never easy, efficiency had to be delivered, and should have been done a long time ago"​, said Kevin Wooding, the group's chairman.

In February the New Zealand dollar reached the equivalent of 71 US, this led analysts to predict that farmer incomes would fall by 2006. When a local currency is high it reduces the income which the group uses to pay its milk suppliers.

Fonterra is an industry group of Federated farmers of New Zealand and which has 13,000 farmers. In terms of revenue, Fonterra is the fourth largest dairy producer in the world, and in terms of volume of milk production, it enjoys second place in the world market. It has business activities across the world where it sells in 140 countries and is responsible for one-third of volume of all milk and milk products traded across international borders yearly.

The group claims that the move will benefit its farmers:

"Dairy farmers look forward to Fonterra focusing their core business of milk processing and to an improved payout",​ Wooding concluded.

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