Fonterra is on the front foot in the safety business, making ethanol for keeping our hands clean

A   report  on  the  NZ Farmer  segment  of   Stuff  caught  the eye of  Point of  Order.  It  led  off  with a  quote   from respected  economist  Cameron  Bagrie.

Thank God for farmers….They’ve felt beaten up over the past couple of years, well, thank God agriculture is still the backbone of NZ.The story of the farming sector at the moment is looking relatively good compared to what we are seeing across a lot of the other sectors.Yes, we are seeing pressure on commodity prices, but the bottom line is the world has got to eat.

It’s a   theme  which  Point of  Order  has  canvassed in  several   posts  over the past  fortnight as the  coronavirus  pandemic has  devastated  other  key sectors of the economy,  including  tourism and hospitality.

On  March  26 the contention was: 

“After the lock-down the  economy’s  recovery  will be  dependent on dairy farmers and  their  milk”.  

And on  March 29:

“What   New Zealanders  will  have to  absorb   in the period the country  is  locked down  is  that  their standard  of  living  will be  permanently depressed  unless   those  vital  export   industries — dairy, meat, horticulture, fishing — are    given  every  encouragement  and  stimulus   to  expand   production  in the years to  come.  Dairy farmers   are  not the  enemy,  as  climate  change warriors  make  out.  They  could  be  our  saviour  in the years  to come”.

It  may be,  as  some pundits argue,  that  NZ  will have to find  new  ways  of  working.  It may have to  re-establish  local  industries,  rather than  rely  on  low-cost  overseas   suppliers—  yet that  all  takes time, not to mention capital.

In the immediate  year or two ahead,  NZ’s  export income  will be heavily dependent  on the country’s primary industries.

For patriotic New Zealanders,  it’s a relief to  know  the giant  co-op  Fonterra   will inject $11bn  into the economy this year through the  milk price   it  pays to  its farmer-suppliers.

The  co-op,  by some yardsticks,  is  NZ’s biggest  company,  with  20,000  employees.  Alongside  it  are several other major  companies processing  NZ  milk   (Westland,  Open Country, Tatua, Oceana)  as well  as a  long list of  specialist producers.

And  though Fonterra   had a  difficult  year in 2019, posting  its  biggest loss ever,  it  reported  a  more positive interim  result  last  month  (total ebit  $806m, up from $312m,  net profit $501m up  from $72m).

Yet  if   Fonterra’s  performance  leaves  one cold  in the current crisis,  how  about  this   insight  into  how the  co-op has found  a  way  to  provide its  own specialist assistance?

It has an  ethanol  business   Lactonol  through  which  it is helping to keep people safe during Covid-19  by making more of its high-grade ethanol available to companies who use it in the production of sanitiser products, including hand sanitiser.

This comes as the need for sanitiser grows exponentially throughout the country.

Fonterra is now manufacturing an additional 220,000 litres, on top of the 375,000 litres it has already made available to sanitiser manufacturers in recent weeks,  and it is now looking at all viable options to increase ethanol production to help with supply of sanitiser in the weeks and months ahead.

On top of that, Fonterra has been working with its customers who use ethanol but don’t make sanitiser, to see if stock can be redirected to create more supply. Working closely with long-time customer, fuel company Gull, the co‑op has been independently testing Gull’s ethanol stock originally destined for fuel to determine where it’s suitable for use in sanitiser.

With the support of Gull, 250,00 litres has been independently tested, and is now approved for sale to sanitiser producers via Fonterra’s distribution network.

To date, an additional 403,000 litres of ethanol stock has been redirected towards sanitiser production, all thanks to the support of Fonterra’s customers. In total, 1 million litres of ethanol has been redirected for sanitiser, which is the equivalent of 5.7 million 250ml bottles of hand sanitiser.

Ongoing work to achieve this has been made possible by the efforts of teams across the co‑op and with the help of Fonterra’s national distributor Axieo.

The  head of Lactanol, Peter Motion, says it’s the socially responsible thing to do and really needed right now, especially those people and businesses on the front line of the country’s Covid‑19 response efforts.

We will continue to work with our distributor and transport providers to improve supply chain efficiencies and increase the weekly volume available to producers from less than 85,000 litres a week to more than 250,000 litres a week. 

“Fonterra is also continuing to work with the government to identify and prioritise industries that need sanitising products as they will be a necessity for all essential services.

“We are currently in the final stage of the process to make our own quality sanitiser product to ensure our people have what they need while at work.”

Production is scheduled to start this weekend.

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