Global Dairy Update February 2019

• Anchor Chef’s Cream has been chosen by the world’s
largest foodservice distributor, Sysco, as one of their top ten
innovative products for 2019 – the first time a New Zealand
product has ever been chosen.
• Fonterra is signing up farms to supply milk for
The a2 Milk Company in the 2019/2020 season.
1
GLOBAL DAIRY
UPDATE
FEBRUARY 2019
• Production in New Zealand to January up
on last year. US production growth remains
steady, EU growth is easing and Australia
is declining.
• Exports from the US, Australia and
New Zealand continue to grow. European
exports steady.
• Imports into Asia and China continue to grow.
Latin America increased but the Middle East
and Africa region is declining.
• Fonterra’s milk collection across New Zealand
for the eight months to 31 January was
1,083 million kgMS, up 5% on the same period
last season.
• Fonterra has updated its forecast milk collection
for the full season, to 1,530 million kgMS, up 2%
on last season, and down 1 % from the previous
forecast of 1,550 million kgMS.
• From regional New Zealand all the way to China —
Robert Spurway, Fonterra’s Chief Operating Officer Global
Operations, reflects on the value of our trade relationship
with China for regional New Zealand.
KEY DATES
28 February 2019
Final date for Applications to
Supply Fonterra
20 March 2019
FY19 Interim Results
Announcement
May 2019
Q3 Business Update
1 June 2019
Measurement Date for Share
Standard 2019/20 Season

%%
To view a chart that
illustrates year-on-year
changes in production –
%%
2
OUR MARKETS
GLOBAL PRODUCTION
PRODUCTION IN
NEW  ZEALAND TO
JANUARY UP ON
LAST  YEAR. US PRODUCTION
REMAINS STEADY, EU GROWTH
IS EASING AND AUSTRALIA
IS  DECLINING
Total New Zealand milk
production increased 8%
in January compared to the
same month last year.
Weather and pasture
conditions throughout
January supported
production which returned
to a more usual pattern
following the previous
season that was adversely
impacted by poor on-farm
conditions. Subsequently the
weather risk has increased
with an extended period of
dryness in the first two weeks
of February.
New Zealand milk production
for the 12 months to January
2019 was 4% higher than
last year.
Fonterra collections are
reported for January, see page
5 for details.
Australian milk
production decreased 7% in
December compared to the
same period last year.
Production for the 12 months
to December is down 2% on
the previous 12 months.
High input costs, increased
cow cull rates, and farm exits
continue to severely impact
milk production. Dairy
Australia has forecast a milk
production decline of 5% to
7% for the season.
Fonterra collections in
Australia are reported
for January, see page 5
for details.
EU milk production
decreased 1% in December
compared to the same
period last year.
The Netherlands, France
and Germany continued
to see year-on-year
decline in production
with The Netherlands
experiencing the largest
decline. This was offset
by continuing strong
growth in Ireland, as well
as solid growth in Poland
and Denmark.
Production for the 12 months
to December was up 1%
compared to the same
period last year.
US milk production
was up less than 1% in
December compared to the
same period last year. Cow
numbers have continued
to decline with the small
year-on-year growth driven
by increased yield per cow.
Margins continue to be
squeezed and in many
cases have been negative
for the last quarter of 2018.
Growth is likely to remain
constrained until some
improvement in margin
is achieved.
Milk production for the
12 months to December
is continuing to hold at
1% compared to the same
period last year driven by the
relatively stronger monthly
production growth at the
start of 2018.
NEW ZEALANDAUSTRALIAEUROPEAN UNIONUSA
Production change
for the 12 months to
December 2018
Production change
for the 12 months to
January 2018
Production change
for the 12 months to
December 2018
Production change

for the 12 months to
December 2018
4211

%
To view a chart that
illustrates year-on-year
changes in exports –
%%
3
OUR MARKETS
GLOBAL EXPORTS
EXPORTS FROM THE
US, AUSTRALIA AND
NEW  ZEALAND CONTINUE
TO GROW. EUROPEAN
EXPORTS  STEADY
Total New Zealand dairy
exports increased by 10%,
or 40,000 MT, in December
compared to the same period
last year. Exports hit a record
level of 449,000 MT, the
highest volume recorded. This
was primarily driven by WMP,
up 26,000 MT. Fluid products,
AMF, and infant formula were
up a combined 18,000  MT.
Butter declined 8,000  MT.
Exports for the 12 months to
December were up 2%, or
54,000 MT, on the previous
comparable period. This was
driven by fluid products, WMP,
infant formula, and AMF up a
combined 120,000 MT. This
was offset by declines in SMP,
cheese and cultured products
down a combined 67,000  MT.
EU dairy exports increased
by 5%, or 21,000 MT, in
November compared to
the same period last year.
This was primarily driven by
lactose, SMP, whey powder,
and butter up a combined
27,000  MT.
Exports for the 12 months to
November were up 1%, or
49,000 MT, on the previous
comparable period with
continued growth in a broad
range of products, led by
infant formula, SMP, and
lactose but offset by declines
in fluid milk products
and WMP.
US dairy exports declined
by 11%, or 21,000 MT, in
November compared to
the same period last year.
There was a decline in
most products including
SMP, whey powder, lactose,
cheese, and WPC.
Exports for the 12 months to
November were up 12%, or
265,000 MT, on the previous
comparable period.
The increase was notably in
SMP, lactose, WPC and WMP,
up a combined 217,000  MT.
Australian dairy exports
increased 3%, or 2,000  MT,
in December compared to
the same period last year.
Infant formula and whey
powder were up a combined
5,000 MT. This was offset
by a decline in WMP of
2,000  MT.
Exports for the 12 months to
December were up 5%, or
37,000 MT, on the previous
comparable period.
Infant formula, fluid milk and
whey powder make up most
of the growth in Australian
exports, up a combined
34,000  MT.
NEW ZEALANDAUSTRALIAEUROPEAN UNIONUSA
1251
2
Export change for the 12
months to November 2018
Export change for the 12
months to December 2018
Export change for the 12
months to December 2018
Export change for the 12
months to November 2018
%

%%%
%
To view a chart that
illustrates year-on-year
changes in imports –
4
OUR MARKETS
GLOBAL IMPORTS
IMPORTS INTO ASIA
AND CHINA CONTINUE
TO GROW. LATIN AMERICA
INCREASED BUT THE MIDDLE
EAST AND AFRICA REGION
IS  DECLINING
Latin American dairy
import volumes¹ increased
9%, or 14,000 MT, in
November compared to
the same period last year.
The increase was across
most product categories,
principally SMP, cheese, MPC
and WMP.
Imports for the 12 months
to November were up 2%,
or 39,000 MT, compared to
the same period the previous
year. SMP, lactose, fluid
products and MPC were up a
combined 64,000 MT offset
by declines in AMF and
WMP of 22,000  MT.
Asia (excluding China)
dairy import volumes¹
were down marginally at
2,000 MT, in November
compared to the same
period last year. SMP and
fluid products were up but
offset by declines in MPC
and WMP.
Although down marginally
for the month, imports
for the 12 months to
October were still up 5%, or
223,000 MT, compared to
the same period the previous
year. This growth was driven
by fluid products and WMP
of 156,000  MT.
Middle East and Africa
dairy import volumes¹
decreased 6% or 20,000 MT
in November compared to
the same period last year.
Small growth in infant
formula and cultured
products was offset by
declines in most other
product categories, totalling
25,000  MT.
Imports for the 12 months to
November were down 5%,
or 212,000 MT, compared
to the same period the
previous year. The reduction
was driven by fluid and fresh
dairy and cheese, down
a combined 229,000  MT.
This was offset by a small
increase in SMP.
China dairy import
volumes increased 17%, or
34,000 MT in December
compared to the same
period last year. This was
driven by increases across
a broad range of products,
particularly WMP, SMP, and
fluid products but offset
by small declines in whey
powder, butter and infant
formula. December WMP
exports from New Zealand
to China hit a record level
of 150,000 MT. Imports for
the 12 months to December
were up 8%, or 213,000  MT,
compared to the same period
last year. Strong demand out
of China continued across all
key categories in particular,
WMP and SMP which are up
a combined 82,000  MT.
LATIN AMERICAASIAMIDDLE EAST & AFRICACHINA
Import change for the 12
months to December 2018
Import change for the 12
months to November 2018
Import change for the 12
months to November 2018
Import change for the 12
months to November 2018
58
5
2
1 Estimates are included for those countries that have not reported data.

%%%
To view a table that shows our
detailed milk collection in New
Zealand and Australia compared
to the previous season –
VOLUME M LITRESDAY
JUNJULAUGSEPOCTNOVDECJANFEBMARAPRMAY










5
OUR MARKETS
FONTERRA MILK COLLECTION 2018/19 SEASON
NEW ZEALANDNORTH ISLANDSOUTH ISLANDAUSTRALIA
Increase for the season from
1 June to 31 January
Increase for the season from
1 June to 31 January
Increase for the season from
1 June to 31 January
5
Decrease for the season
from 1 July to 31 January
55
16
NEW ZEALAND MILK COLLECTION
Fonterra’s milk collection
across Australia for the seven
months to 31 January reached
83 million kgMS, down 16% on
the same period last season.
Fonterra collections in January
reached 11 million kgMS, down
23% on January last season.
January's average temperature
was the highest on record.
Fonterra’s share of monthly
collections continues to reduce
due to high on-farm prices,
severe weather, substantial
increase in culled cows, farm
retirements and intense
competition for milk supply.
North Island milk collection
in January was 98 million
kgMS, 10% higher than January
last season reflecting the poor
on-farm conditions last season.
Northland has experienced
prolonged hot and dry
conditions. Pasture quality
in Waikato and Taranaki has
also recently declined due to
hot weather.
Milk collection for the 2018/19
season to date reached
665 million kgMS, up 5%.
South Island milk collection
in January was 71 million
kgMS, 3% higher than January
last season.
Hot weather and low rainfall
have led to pasture growth
rates slowing and use of
conserved supplementary
feed in some regions however,
Canterbury has seen little
impact from the hot and dry
conditions, having maintained
good grass growth and pasture
cover to date.
Milk collection for the 2018/19
season to date reached
418 million kgMS, up 5%.
Fonterra’s milk collection
across New Zealand for the
eight months to 31 January was
1,083 million kgMS, up 5% on
the same period last season.
Despite the hot and dry
conditions continuing
to impact most regions,
production remains ahead of
this time last season, which was
the lowest in three years due to
adverse weather conditions.
Fonterra collections in January
were 169 million kgMS, 7% up
on January last season.
%
1,530M
KGMS
Fonterra has updated its
forecast milk collection to
1,530 million kgMS for the
2018/19 season.
Fonterra’s New Zealand milk
collections forecast is 2%
higher than last season, which
was negatively impacted by
poor on-farm conditions.
Fonterra has reduced its full
season forecast by 1% to reflect
the impact of ongoing hot and
dry on-farm conditions, and
the corresponding downwards
pressure on milk flows.
On-farm conditions will
continue to be an important
factor on the milk supply for
the remainder of the season.
We will continue to
provide updates as the
season progresses.
Forecast Fonterra Milk
Collection Across New Zealand

%%%
%%%
To view more information,
including a snapshot of the
rolling year-to-date results –
%
6
GDT PRICE INDEXNZDUSD SPOT RATE
FEB DEC MAY JUL SEP DEC FEB MAY JUL SEP FEB 


,
,
,
.
.
.
.
.
PRICE INDEX
NZD  USD
OUR MARKETS
FONTERRA GLOBAL DAIRY TRADE RESULTS
Fonterra GDT sales
by destination:
Dairy commodity prices
and New Zealand
dollar trend
The New Zealand dollar
stabilised in the new year
following moves by the US
Federal Reserve to moderate
their rhetoric around further
removal of monetary stimuli.
Fonterra GDT results at
last trading event
19 February2019:
The next trading event will be held on 5 March 2019. Visit www.globaldairytrade.info for more information.
Change in Fonterra’s
weighted average product
price from previous event
0.2
Fonterra’s weighted
average product price

(USD/MT)
3,308
USD
Fonterra product quantity
sold on GDT
000’ MT
24.6
NORTH ASIA (INCLUDING CHINA)
SOUTH EAST ASIA
MIDDLE EAST AND AFRICA
LATIN AMERICA
OTHER
USD 3,667/MT
2.9
CHEDDAR
USD 5,740/MT
2.6
RENNET CASEIN
USD 2,612/MT
2.2
SMP
USD 4,495/MT
1.1
BUTTER
USD 5,620/MT
0.7
AMF
USD 3,022/MT
0.2
WMP
24,644
MT
LATEST AUCTION
480,405
MT
FINANCIAL
YEAR‑TO‑DATE

7
Anchor Chef’s Cream
the real Cream of
the Crop
Anchor Chef’s Cream
has been chosen by the
world’s largest foodservice
distributor, Sysco, as one
of their top ten innovative
products for 2019 – the first
time a New Zealand product
has ever been chosen.
Each year, Sysco selects
ten products to showcase
to their restaurant partners,
where they hold the
significant distribution share
of the 1.2 million outlets
across the USA.
Director of Global
Foodservice Grant Watson
says Anchor Chef’s Cream is
one of a kind and the recipe
is a closely guarded secret.
“Our culinary cream was first
developed by our Research
and Development team
more than ten years ago.
It’s specially formulated to
perform well in professional
kitchens, while keeping a
great taste and appearance.
And it’s already reduced
saving chefs valuable
preparation time.”
Before selecting our Anchor
Chef’s Cream as one of their
top ten products, Sysco put
the cream through its paces.
“We’re pleased to say that
when tested by Sysco and
their partner restaurants, our
cream achieved one of the
highest innovation scores
and purchase intent in the
history of Sysco’s innovation
platform,” says Mr Watson.
Through their 6,000-person
sales team and their
200 chefs, Sysco will spend
2019 promoting Anchor
Chef’s Cream to chefs and
restaurants across the US.
“This is an excellent way
for us to expand our reach
across America. The US
foodservice market uses
an estimated 4.6 million
metric tonnes of dairy per
year, and with cream-based
menu items being very
popular across the US, we
believe there is a significant
opportunity to bring new
value to our farmers,
customer partners and their
consumers, with our unique
cream innovation.”
Fonterra is signing up
farms to supply milk for
The a2 Milk Company in
the 2019/2020 season.
Mike Cronin, Fonterra
Managing Director of
Co-operative Affairs, says
“Signing up New Zealand
farms to significantly
increase supply of high
quality milk to The a2 Milk
Company is a positive step
forward. It clearly shows the
strength of our strategic
relationship, and our shared
commitment to fast-track
market growth and enable
farmers to create additional
value from their milk.”
The Co-op’s initial milk
pool will be based in the
Waikato around its Hautapu
site and will support the
production of ingredients.
It is anticipated around
100 farms will be needed for
next season.
Jayne Hrdlicka, The a2 Milk
Company Managing Director
and CEO, says “The a2 Milk
Company is pleased to be
making progress on our
relationship with Fonterra.
These farms will help support
new growth areas for our
company across existing
and new markets. This is
the next step in what we
believe will be a fruitful
long-term relationship with
tremendous potential.”
The location of the milk pool
was determined by several
factors. Most importantly,
the site needed the ability
to manufacture the specific
product in demand, produce
relatively small batches and
adapt easily to any product
demand changes.
“While other regions were
thoroughly considered,
ultimately the decision must
be demand-led. The ability
to efficiently manufacture
a range of products to
meet that demand was
the over-riding factor in
choosing a site. As demand
and product lines grow, we’ll
look to expand the milk pool
to enable more farmers to
participate,” said Mr Cronin.
Most of the value from the
relationship with The a2 Milk
Company will be returned
to all Co-op farmers through
the dividend. Participating
farms will also receive a
premium for their milk.
This development follows
the national launch of the
a2 Milk™ brand by Anchor
from late September2018.
OUR PERFORMANCE

FROM REGIONAL
NEW ZEALAND
ALL THE WAY
TO CHINA
Robert Spurway, Fonterra’s
Chief Operating Officer
Global Operations, reflects
on the value of our trade
relationship with China for
regional New Zealand.
Earlier this month, families
across China celebrated the
lunar new year. Alongside
them, around 170,000
Chinese New Zealanders and
their families also celebrated
the Year of the Pig. It’s
great to see opportunities
for other Kiwis to join in at
various Lantern Festivals and
community events across the
country too.
While most of the new year
festivities are being held in
the main urban centres, it’s
regional New Zealand that’s
quietly punching above its
weight when it comes to the
relationship with our biggest
trading partner.
Last year New Zealand
exports to China were worth
more than $16.6 billion,
and $3.8 billion of that
was generated by Fonterra
in rural and regional
New Zealand. In total,
around a quarter of
Fonterra’s exports went
to China where they were
consumed by around
150 million people.
An increasing Chinese
appetite for New Zealand
dairy is helping drive our
regional economies and
now 11 percent of all dairy
in China comes from
Fonterra farmers. We’re
not just talking about milk
powder either.
Fonterra mozzarella tops
more than half a billion
pizzas and our cream
goes into 500 million tea
macchiatos every year. A
little bit of New Zealand is
ending up on shelves and
tables across China and in
return that product is helping
put food on Kiwi tables.
Our China export earnings
help generate income for
forklift drivers in Darfield,
Maungaturoto tanker
operators, cheese-makers in
Stirling and processors at our
plant in Te Awamutu.
The benefits of our
relationship with China
flow into communities as
our employees and farmers
support businesses, schools
and other local organisations
across the country.
Waikato was one of
Fonterra’s biggest regions
for China exports, totalling
around $1.2 billion in
products, like cream, cheese
and milk powder. This works
out to around $2,500 per
person in the region.
Of our 30 New Zealand
sites, Clandeboye in
Canterbury was the top
producer, exporting around
$566 million in products to
China. Southland’s Edendale
came a close second
exporting nearly $560 million
and in Taranaki Whareroa
exported $437 million.
The positive influence of
Chinese consumer demand
is having a positive impact
throughout the year.
I’m fortunate my job has
taken me to China a fair
number of times and my
sense of pride is as strong as
ever when I see our products
on shelves, in bakeries and in
beverages. There’s something
special about knowing that a
little bit of regional and rural
New Zealand has found its
way into the lives of people
in places like Shanghai,
Beijing and Dongguan.
FONTERRA
EXPORTS TO
CHINA
Fonterra produced and
exported $3.8 billion in
dairy products to China
in 2017/18.
OUR CO-OP
8

PRODUCTION
AUSTRALIAAVERAGE
UNITED STATES
NEW ZEALANDEU
DEC JUL JUN MAY MAR FEB JAN SEP NOV OCT AUG APR 
LIQUID MILK M LITRES














EXPORTS
AUSTRALIA
UNITED STATES
NEW ZEALANDEU
AUG JUL JUN APR MAR FEB JAN DEC NOV OCT SEP MAY 
MT s







AVERAGE
IMPORTS
MIDDLE EAST & AFRICALATIN AMERICA
ASIACHINA
JUL JUN APR MAR DEC JAN FEB SEP NOV OCT MAY AUG 
MT s






AVERAGE
9

SUPPLEMENTARY INFORMATION
Global Dairy Market
The charts on the right
illustrate the year-on-year
changes in imports, exports
and production for a range of
countries that are important
players in global dairy trade.
The absolute size of
the bars represents the
change in imports, exports
or production, relative
to the same period the
previous year.
Averages are shown where
data is complete for the
regions presented.
NOTE: Data for EU, US and Australia to December; New Zealand to January.
NOTE: Data for EU and US to November; New Zealand and Australia to December.
NOTE: Data for China to December; Asia, Middle East and Africa, Latin America to November.
SOURCE: Government milk production statistics/GTIS trade data/Fonterra analysis.

WEIGHTED AVERAGE PRICEQUANTITY SOLD
APR 
MAR 
NOV 
DEC 
JAN JUL 
AUG 
MAY 
SEP 
FEB OCT 
JUN 

,

,

,

,
,

,

,

,

,
,
,
,
WEIGHTED AVERAGE PRICE USDMT 
QUANTITY SOLD  MT 
10

SUPPLEMENTARY INFORMATION
Fonterra milk
production
The table on the right
shows Fonterra milk solids
collected in New Zealand
and Australia compared
to the previous season.
MILK COLLECTION
(MILLION KGMS)
JANUARY
2019
JANUARY

2018
MONTHLY
CHANGE
SEASON-
TO-DATE
2018/19
SEASON-
TO-DATE
2017/18
SEASON-
TO-DATE
CHANGE
Total Fonterra
New Zealand
169.0158.36.8%1,082.61,035.84.5%
North Island98.389.79.6%664.8636.14.5%
South Island70.868.63.2%417.8399.84.5%
Fonterra Australia10.613. 7(22.6%)83.098.3(15.5%)
Fonterra GDT results
This table provides more
information on the latest
results, including a snapshot
of the year-to-date results.
LAST TRADING EVENT
(15 JANUARY 2019)
YEAR-TO-DATE

(FROM 1 AUGUST 2018)
Quantity Sold on GDT
(Winning MT)
24,644480,405
Change in Quantity Sold on GDT
over same period last year
29.8%16.4%
Weighted Average Product Price
(USD/MT)
3,3082,981
Change in Weighted Average
Product Price over same period
last year
(11. 7%)(8.9%)
Change in Weighted Average
Product Price from previous event
0.2%–
Fonterra GDT Results
This chart shows Fonterra
GDT prices and volumes over
the past 12 months.

11
AMF
Anhydrous Milk Fat.
BMP
Butter Milk Powder.
DIRA
Dairy Industry Restructuring
Act 2001 (New Zealand).
Farmgate Milk Price
The price for milk supplied in
New Zealand to Fonterra by
farmer shareholders.
Fluid and Fresh Dairy
The Fonterra grouping
of fluid milk products
(skim milk, whole milk
and cream – pasteurised
or UHT processed),
concentrated milk products
(evaporated milk and
sweetened condensed milk)
and yoghurt.
GDT
Global Dairy Trade, the
online provider of the twice
monthly global auctions of
dairy ingredients.
kgMS
Kilogram of milk solids, the
measure of the amount of
fat and protein in the milk
supplied to Fonterra.
LME (Liquid Milk
Equivalent)
A standard measure of the
amount of milk (in litres)
allocated to each product
based on the amount of fat
and protein (“milk solids”) in
the product relative to the
amount of fat and protein in
a standardised raw milk.
Non-Reference Products
All dairy products, except
for Reference Products,
produced by the NZ
Ingredients business.
Reference Products
The dairy products used
in the calculation of the
Farmgate Milk Price, which
are currently WMP, SMP,
BMP, butter and AMF.
Season
New Zealand: A period
of 12 months to 31 May
in each year.
Australia: A period of
12 months to 30 June
in each year.
SMP
Skim Milk Powder.
WMP
Whole Milk Powder.

GLOSSARY