sharetrader
Page 227 of 2376 FirstFirst ... 1271772172232242252262272282292302312372773277271227 ... LastLast
Results 2,261 to 2,270 of 23752
  1. #2261
    Guru Xerof's Avatar
    Join Date
    Mar 2005
    Posts
    3,005

    Default

    With potentially 40% growth next year I would say farmers may be struggling to keep up with demand...
    This is the nub of my main issue with this "explosive growth, Coca cola-like" hype I keep reading on this thread. Does anybody have a detailed understanding of the supply side of this business, globally? I am very happy with demand growth and future prospects, but I can see major issues ahead if the supply cannot match it. Before I get back on board I'd be very interested in some facts on supply, if available

  2. #2262
    Banned
    Join Date
    Sep 2012
    Location
    Christchurch
    Posts
    1,985

    Default

    Quote Originally Posted by Xerof View Post
    This is the nub of my main issue with this "explosive growth, Coca cola-like" hype I keep reading on this thread. Does anybody have a detailed understanding of the supply side of this business, globally? I am very happy with demand growth and future prospects, but I can see major issues ahead if the supply cannot match it. Before I get back on board I'd be very interested in some facts on supply, if available
    It’s not so much a matter of supply side growth I don’t think Xerof, as it being a matter of supply side conversion.

    As demand and thus market share grows for a2 milk, proportionally ATM solicit supply from the conversion of existing farms. The conversions are not financed by capital, but by a mark-up on delivered milk price at the farm gate.

    ATM offers a premium on farm gate sales both to cover farmer’s conversion costs and also as an incentive. In Australia this margin is 8 to 10%, I understand the margin in the UK is presently 5%.

    Notably, within the UK and US, fresh milk consumption overall is gradually dropping, and this may also possibly offer an incentive for existing dairy farmers to convert into a growing market for a2.

    ATM told us recently that they will need to increase the number of conversions in NSW to supply the China fresh milk airfreight business which is expected to be 3M litres next year, and doubling beyond that for the next few years. I would agree that it will be interesting to watch that supply side growth for China in addition to the 38% p.a Australian supermarket sales growth.

    I guess your question though is at what point would there be saturation, or at what point would dairy farmers no longer wish to convert, or not wish to convert at a rate required by ATM.

    With market share at only 10% in Australia and with only 20 conversions thus far in the UK, it seems a long way off.

    There are still 90% of Australian A1/A2 dairy farmers to draw from just yet. If demand side were to become explosive then ATM may have to increase the incentivisation, but overall in such a circumstance that may well be a good thing for the a2 milk company and shareholders alike.

    Perhaps the answer is simply that farmers are business people, if the incentive is right they will take it.

  3. #2263
    Member
    Join Date
    Aug 2013
    Posts
    276

    Default

    Quote Originally Posted by snapiti View Post
    I am not 100% sure on how the company approaches this but I know many farms would already have a high number of A2 only producing cows.
    The higher % of your existing herd that are A2 the higher % your replacement hiefers will be A2 so the quicker you can convert.
    It would not be unusual for a full conversion to A2 to take place over a 2 year period.
    Longer if the farmers existing % of A2 cows are low and shorter time period if the % is high.
    Like I said there are plenty of herds around the world that will already have a very high % of A2 cows and those will be of more interest to ATM.
    Don't be at all surprised that it only takes 12 months for a high % herd to go full A2 production however this would require some a2 replacement cows to be bought in(which is not hard) so no production losses occur.
    I am very confident that there are an abundance of easy to convert farms around the world therefore supply of A2 milk is not going to be an issue.
    The farmer I talked to a year back said that himself and other farmers in the area had no intention of going "full A2" in the short term. So it was not a matter of herd conversion as much as herd separation. Makes sense really, why burn the bridge with your current milk co while the A2 business is still in the risky stages. He also said his current purchasers had eased their policy on supplying both A1 and A2 to separate entities - I assume to protect their own supply long term, and to deal with the high demand from farmers.

  4. #2264
    Senior Member
    Join Date
    Jun 2014
    Location
    Wellington
    Posts
    630

    Default

    Quote Originally Posted by Ginger_steps_ View Post
    The farmer I talked to a year back said that himself and other farmers in the area had no intention of going "full A2" in the short term. So it was not a matter of herd conversion as much as herd separation. Makes sense really, why burn the bridge with your current milk co while the A2 business is still in the risky stages.
    There is a small cost factor in going full A2, and a farmer will only do it if there is a company offering above the standard Fonterra farmgate payout rate for it. Herd separation is certainly a factor, but there's no problem of "burning the bridge with your current milk co". Fonterra accepts full A2, in fact it doesn't even test the milk to see what kind it is.

  5. #2265
    Member
    Join Date
    Aug 2013
    Posts
    276

    Default

    Quote Originally Posted by NT001 View Post
    There is a small cost factor in going full A2, and a farmer will only do it if there is a company offering above the standard Fonterra farmgate payout rate for it. Herd separation is certainly a factor, but there's no problem of "burning the bridge with your current milk co". Fonterra accepts full A2, in fact it doesn't even test the milk to see what kind it is.
    Im referring to Australia - The company had a problem with the farmers supplying them as well as a2 milk co (eg the competition who are trying to prove a1 is harmful!), not what type of milk they were supplying. The burning the bridge statement was referring to the farmer ceasing to supply a milk co all together in order to supply only to a2 milk co - eg if a2 co were to collapse, the farmer would need to renegotiate supply with the original or a new milk co. My point was that they could have a finger in both pies for security, rather then solely rely on a2 co.

    Quote Originally Posted by snapiti View Post
    i think you will find conversion would only work for farmers which already had a high percentage of A2 cattle in their herd. Plenty of these around.........
    I don't think you will get a great perception of the situation from talking to just one farmer......... and for the record most dairy farmers don't want to believe their precious A1 product has any health issue's.
    Can't understand the burning of bridge's thing as all large dairy companies don't care if you supply them with A1 or A2 or a combination.
    Hows you tone Mr SNAPiti-knows-it-all. For the record........ the farmer was a MPI representative............. at a chamber of commerce meeting........., and as mentioned........., he referenced other farmers in his area............
    Last edited by Ginger_steps_; 22-11-2014 at 09:20 PM.

  6. #2266
    Senior Member
    Join Date
    Jun 2014
    Location
    Wellington
    Posts
    630

    Default

    From an item in today's Melbourne Age (business section):

    A milk war at the bottom end of the market between Coles and Woolworths, coupled with the rise of A2 Milk at the premium end of the market, have affected dairy giants Lion and Fonterra. A2 now has the only two milk products listed among the top 20 food brands in the country.


    As a result Lion, which supplies milk and soft drink products, saw its supermarket sales fall 3.8 per cent last financial year.


    Fonterra's sales were even worse, down 8.3 per cent.



  7. #2267
    Member
    Join Date
    Aug 2014
    Location
    Cheerland
    Posts
    117

    Default

    Ah well, the risk is always there (inevitably) in any kind of businesses. Whilst with 38% sales increase in Australia, momentum growth in Britain, fresh (official) entry into China, and prospective expansion in America, I believe that farmers would have their own judgement on what to choose. Again risk is always existing....so let figures speak

  8. #2268
    Member
    Join Date
    Aug 2013
    Posts
    276

    Default

    Quote Originally Posted by snapiti View Post
    so you are a dairy expert now you have talk to one member of MPI.... LOL.
    Nope, never at any point said I was an expert, nor did i question if you were - but thanks for taking the time TO LET US ALLLLLL KNOW!! I was actually just adding a perpective passed on to me by a professional
    Quote Originally Posted by snapiti View Post
    sounds like you need to get out of the city more.
    Sounds like your a little lonely out there.
    Quote Originally Posted by snapiti View Post
    Snaps being a farmer should now a thing or two about the industry.
    Yes, and i imagine you are also the original source of the first four letters of the word "Cocky".
    Last edited by Ginger_steps_; 22-11-2014 at 11:01 PM.

  9. #2269
    Advanced Member
    Join Date
    Oct 2012
    Posts
    2,168

    Default

    I mentioned to CEO at AGM about bringing out a2 chocolate milk. For the chocolate lovers, the chocolate comes first and the a2 can be mentioned at the end, as a healther choice. Just like Lewis Road Creamery chocolate milk, made from NZ's biggest organic dairy farm... Green Valley Dairy. 300ml bottle for $3.59 and 750ml bottle for $6.29. If you read page 12 & 13 of today's Sunday Herald -- that could be a2 chocolate milk, if they played their cards right.
    Last edited by see weed; 23-11-2014 at 09:06 AM.

  10. #2270
    Senior Member
    Join Date
    Jun 2014
    Location
    Wellington
    Posts
    630

    Default

    See Weed, I'm not sure that A2 should try to copy someone else's idea which could turn out to be a two-year wonder. A2 has its own strong reason to appeal to consumers - it's the healthier choice, as you say - and that should not just come second to chocomania as the selling point.

    The priority for us as ATM shareholders must be to see A2 established with 8-15% of the market in UK, NZ and parts of USA and Europe on the basis of consumer acceptance that it is healthier and therefore a premiium product worth paying more for, as in Australia. Then I'm sure there will be some baristas who will go A2-only as a marketing ploy, as well as other boutique opeerators, who will work out ways of producing chocolate milk with A2 milk that is not unlike the Lewis Road product - as a sideline - if there is still demand for it. You shouldn't need chocolate to sell the A2 story, and it would confuse the basic A1/A2 message. Also, Lewis Road uses organic milk, and A2 is not usually organic.

    There will be more profit long run in supplying plain A2 milk (full and low-fat), UHT, yogurt, cream, ice cream etc than in trying to compete with Lewis Road. The one area where Lewis Road might teach ATM a thing or two is by using the experience and slickness of Saatchis. The science message can be a bit hard to get across to the media and public, especially given the regulations against making health claims for food and beverages. It's amazing, NZ fruit and vege shops are not even allowed to tell their customers the WHO officially recommends fresh fruit and veges to help protect against cancer.

Tags for this Thread

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •