The Weekly Dairy Report: Cold weather tests feed budgets as some predict dairy price bottom is close

Q: What does the OIO do?

UBS analyst Jordan Rogers said a2 was a "category killer brand with growth options in new geographies and categories", considering it has "created unique dairy products with perceived health benefits that open up cow's dairy to a raft of new potential consumers".

http://www.smh.com.au/business/perich-family-increases-freedom-foods-st…

The billionaire Perich family increased its controlling stake in Freedom Foods just before the company revealed its interest in taking over dairy processor a2 Milk. Anthony, Ronald and Michael Perich, who are all directors of Freedom Foods, bought about 27,000 Freedom Foods' shares at $2.70 each through their private investment company Arrovest last Thursday.

The trade was disclosed to the ASX on Monday before the company confirmed it had expressed interesting in taking over a2 Milk in partnership with an "unnamed leading international dairy liquid milk company".

It's been about 15 years now since legacy capital has decided that it is more useful to secure lines of supply for profitability than it is to compete to develop products in the marketplace.
This is why farmers were concerned that Fonterra was too tall to smell the grass.

It's an action plan. So it really doesn't fit their actual operations and ignores many of the overheads that the one-stop-shop that Fortress Fonterra is known for - does the carpet match the drapes?

UHT has been identified as a neutral performing product (ok return, ok margin, so fits into the "Question Mark" territory). Frankly the product tastes like crap. It tastes like reconstituted milk powder, whomever is heading that taste testing panel needs to be reviewed.
As I understand it UHT has been designed for "emergency supply" and "long shelf life" - however if the taste issue can be resolved there is much potential for long-transport, low-energy impact supply that will tie in VERY well with the future of Internet sourcing.
(To which fonterra SHOULD be looking at starting direct food supply to market (AND picking up supporting brands to do so) - although don't use your existing web people, they suck. All their taste is in their mouths (c.f. UHT flavour above.))

Why is yoghurt performing so poorly? It's one of the most nutritional foods (far better for you than milk alone or cheeses). SMP....well yeah....seriously it's a byproduct fit only for some cooking products. Development work needs to done to tie it with some _external_ product developers, for ready to market targeted products.

Don't put too much weight on the infant formula - that is going to be one -nasty- sh..fight. I don't think Danone is going to let Fonterra's purchase of Bearingmate to pass easily (oh and then there was that withdraw thing). There are companies "risking-all" in that market and when they get cornered they're going to be looking for a fight and taking all the margin out if that;s what it takes to stay in the ring.

Cheese has never been a great performer...and won't be if staff don't register the documents on time...
The cheese product is rapidly pricing itself off the market for many people (myself included), with plant already setup, and milk payout low, there is little excuse for it. If you want demand to lift there needs to be work down to work out why the price has escalated.

* get some school kids tours into those building sites for the Edendale and Lichfield. Not just open days. It's a huge difference from listening to Fonterra's usual marketing hype and handouts which are totally distance and just the usual bullshit advertising which is totally distance from most peoples real worlds. Get the kids on site, so young Kiwi's can get a feeling for a _big_ expansion, see things in pieces. Then as things grow they have a memory to call their own - when I was small went we saw that huge factory being built. Doing this with young people - especially if you're putting milk-into-schools - creates a fresh context, they can see and remember it growing around them for the rest of their lives...if you make the impact now. Every time they see a milk container they will remember being one of those feet on the ground _on_the_real_site_, everytime the drive past they will remember a part built building reaching for the sky. Or you could just give the school a pile of advertising pamphlets for the kids to put in the garbage with everything else....

pages 7 -15. They're suffering "big company" issues. The focus on Globalisation is continuing to destroy low end efficiencies and deliverables. this always creates leakage and results in processes become over expensive - better to remember OOD rules (OOD is Object Orientated Design, a computational science algorithm process, see: http://butunclebob.com/ArticleS.UncleBob.PrinciplesOfOod . It's strength lies in breaking huge problems with 5 - 1,000,000,000 individual processes and keeping them running efficiently and effective. Another personal management-meta for me. How do you get your business units to maintain efficency, yet have effective processes, but without being too rigid. with billions of computers users using that use machines running binary for all sorts of problems there has to be something in the process. Encapsulation ensure manageability, abstractions flexibility and stops micromanagement, task dependency develops rigorous feedback methodologies while acyclic mentality stop resource conflict. Microsoft and Oracle are companies worth looking at - are they in the same industry? they're in the industry of being profitable and keeping paying customers happy - is that the industry Fonterra wants to be in?

Page >27 . Project Velocity, sounds nice buts its exceeding generic and vague. Yes we all *want* to do better. Yes we all have seen generic workstream graphs (what exactly is "working capital" (is it capital reserves). Why is does Farm Source have no commercial element (after all it is direct to consumer)?
How does project "Velocity" (aka "streamling) interact with much needed security transistions/renovation.
And I'm betting with Fonterra's legacy workforce with its hierarchical mentality (and those of the drones in the countries it works) will result in page 28, items (4) and (5) actually working _backwards_. That they will not have the depth of understanding and 'personal security' within themselves to renovate the system and will result in more mega-docx like the suppliers handbook and extra personnel being involved that will make things worse rather than better.

PS, try to work on systems that are Designed as "Closed loop" rather than "Open loop" (electronics term) which means possessing internal feedback paths to show that results of an action align with the command given for the action. A way to think about it is "Closed loop" is turning on a light switch before entering a room - and being able to see into the room gives feedback that _you_can_see_ (purpose) before entering the space. And "Open loop" is flicking the switch on the wall then charging in expecting that just because you made the motion that the room will be lit and safe (designed tactical target). the closed loop, assures you that the motion (metric) was appropriate, that the activity of flicking the switch was correct (accuracy of procedure and equipment), that it was the right light switch (correct identification of target and target influence points), and that there was no in between failure (systemic functionality). If your manager can't identify the closed-loop goals then they need further training because they clearly don't know what they are supposed to be achieving - if you don't know that you need to be (safe to proceed to walk forwards), then at the next step up, what's the point of running to the bathroom/telephone/bed.... (project to achieve goal)

Hope over reality?

Being polite of course.

http://www.attenbabler.com/chinese-dairy-imports-update-jun-15/

all that (reported) demand... and yet the price paid in NZ is only $4.40 ??

Does that mean that the Demand vs Supply curve doesn't work??