Global Dairy Update July 2020

• The Co-operative Difference payment.
1
Global Dairy
UPDATE
• Beginning of 2020/21 season in New Zealand.
Australia nears end of season on improved
monthly production. EU monthly production
slows, US improves.
• New Zealand and Australia monthly exports
decline and monthly increase from US and EU.
• Latin America, Asia and Middle East and Africa
imports show strong decline. China monthly
imports improve.
• Fonterra’s New Zealand milk collection for
the first month of the 2020/21 season was
14.7 million kgMS, less than 1% of the full
season  forecast.
• Fonterra's Australia milk collection reached
107.8 million kgMS for the full 2019/20 season
to 30 June 2020.
• Doing our bit to support New Zealand’s small and
medium-sized businesses.
Key Dates
31 July 2020
End of Financial Year 2020
21 September 2020
FY20 Annual Results
Announcement
20 April 2021
Compliance Date for
2020/21 Season
JULY 2020

%
%
%%
%
%
%%
Change for June 2020
compared to June 2019
Change for June 2020
compared to June 2019
Change for May 2020
compared to May 2019
Change for May 2020
compared to May 2019
Change for the 12 months
to June 2020
Change for the 12 months
to June 2020
Change for the 12 months
to May 2020
Change for the 12 months
to May 2020
0.56.02.0
1.10.91.3
0.3
0.5
2
OUR MARKETS
Global Production
Beginning of 2020/21
season in New Zealand.
Australia nears end of
season on improved
monthly production. EU
monthly production slows,
US
improves
New Zealand milk
p
roduction¹ increased
2.0% on a litres basis in June
compared to June last year.
June typically repre
sents
around 1% of the season's
p
roduction.
A warm start to winter
and significant rainfall for
many parts of the country
have seen favourable
conditions for the start of the
new season.
New Zealand milk
p
roduction for the 12 months
to June was 0.5% lower than
last year.
Fonterra collecti
ons are
reported for June, see page 5
for details.
Australia milk
production increased 6.0%
in May compared to May
last year.
Improving seasonal
conditions stabilised
production in the second
half of the 2019/20 season
and improved the outlook for
the 2020/21 season.
Production for the 12 months
to May was down 1.1% on the
previous 12 months.
Dairy Australia has
moderated its milk
production outlook for
2019/20 upwards to a drop
of just 1-3% on last year.
Fonterra collections in
Australia are reported for June,
see page 5 for details.
EU (including UK) milk
production decreased by
0.3% in May compared to
the same period last year.
The main regions showing
a decline in production
were Italy (down 7.5%),
France (2.0%) and the UK
(1.0%). Partially offsetting
this decline were increased
volumes in Ireland (up 3.5%)
and Poland (1.8%).
The decline is likely related
to the slow-down in
foodservice and tourism-
related consumption.
EU milk production for the
12 months to May was up by
0.9% compared to the same
period last year.
US milk production
increased by 0.5% in June,
compared to the same
period last year.
US milk production improved
year-on-year in June
following May’s slow-down
due to production restriction
programmes put in place.
Milk production for the 12
months to June was 1.3%
higher compared to the
same period last year.
NEW ZEALANDAUSTRALIAEUROPEAN UNION/UKUSA
To view a chart that
illustrates year-on-year
changes in production –
1 New Zealand production is measured in litres.
Note: 2020 production numbers include one extra day of production in February as 2020 is a leap year.

To view a chart that
illustrates year-on-year
changes in exports –
3
OUR MARKETS
Global Exports
New Zealand and Australia
monthly exports decline and
monthly increase from US
and EU
Total New Zealand
dairy exports decreased
by 7.6%, or 21,733 MT, in
May compared to the same
period last year.
This was primarily driven by
lower volumes of WMP to
China and Bangladesh, down
6,944 MT, butter to China,
down 6,293 MT, MPC to the
US, down 3,600 MT, but
partially offset by an increase
in SMP, up 6,279  MT.
Exports for the 12 months to
May were down by 2.7%, or
34,427 MT, on the previous
comparable period. This was
primarily driven by butter,
WMP and AMF.
EU (including UK) dairy
exports increased by
7.0%, or 35,526 MT, in April
compared to the same
period last year.
This was mainly driven by
increases in whey to China
and SE Asia, butter to US
and MENA, lactose to China
and WMP to Oman, up a
combined 33,835 MT. SMP
and fluid milk products
partially offset this increase,
down 9,963  MT.
Exports for the 12 months
to April were up 5.4%, or
301,234 MT, on the previous
comparable period. Butter,
cheese and fluid milk
products were the main
drivers of this growth, up a
combined 223,238  MT.
US dairy exports
increased 14.7%, or 29,809  MT,
in May compared to the same
period last year.
May export volumes were
driven by record volumes of
SMP to SE Asia, MENA and
China (up 15,596 MT), higher
exports of lactose to SE Asia
and China (up 5,682 MT) and
higher volume of whey to
China (up 4,815 MT).
Exports for the 12 months to
May 2020 were up 4.4%, or
100,698 MT on the previous
comparable period, driven by
SMP and WPC and lactose, up
a combined 131,966 MT, and
partially offset by decreases in
whey, down 23,078  MT.
Australia dairy exports
decreased by 18.4%, or
12,455 MT, in May compared
to the same period last year.
This was primarily driven by
fluid milk products, infant
formula and WMP, down a
combined 10,792  MT.
Exports for the 12 months
to May were down 8.9%, or
70,244 MT, on the previous
comparable period.
Declines were recorded
across a broad range of
products with SMP, infant
formula, whey, cheese, butter
and WMP down 82,244 MT
and partially offset by fluid
milk products, up 17,868  MT.
NEW ZEALANDAUSTRALIAEUROPEAN UNION/UKUSA
%
%
%%
%
%
%%
Change for May 2020
compared to May 2019
Change for May 2020
compared to May 2019
Change for May 2020
compared to May 2019
Change for April 2020
compared to April 2019
Change for the 12 months
to May 2020
Change for the 12 months
to May 2020
Change for the 12 months
to May 2020
Change for the 12 months
to April 2020
14.718.47.6
8.95.44.4
7.0
2.7

To view a chart that
illustrates year-on-year
changes in imports –
4
OUR MARKETS
Global Imports
Latin America, Asia and
Middle East and Africa
imports show strong
decline. China monthly
imports improve
Latin America dairy
import volumes¹ decreased
12.0%, or 18,444MT, in April
compared to the same period
last year. This was driven by
continued lower volumes of
SMP and cheese to Mexico,
and butter to Chile, down a
combined 18,583  MT.
Imports for the 12 months to
April 2020 were down 2.7%,
or 52,602 MT, compared
to the same period the
previous year.
Decreases were driven
primarily by infant formula,
WMP, SMP and whey, down
a combined 74,096 MT but
largely offset by increases in
WPC, up 18,916  MT.
Asia (excluding China)
dairy import volumes¹
decreased 14.7%, or
65,235 MT, in April compared
to the same period last year.
Decreases were recorded
primarily in WMP to SE Asia,
SMP and fluid milk products
to the Philippines, and cheese
to Japan, down a combined
57,385  MT.
Imports for the 12 months
to April were down 5.0%, or
247,484 MT, compared to the
same period the previous year.
Decreases were recorded
across SMP, WMP, fluid
products, and infant formula,
down a combined 249,582  MT.
Middle East and Africa
dairy import volumes¹
decreased 7.1%, or 28,223  MT,
in April 2020 compared to
the same period last year.
Decreases were recorded
principally in butter to Iran
and Turkey and fluid milk
product to Libya, down
a combined 42,881  MT,
and partially offset by
increased volumes of SMP of
19,064  MT.
Imports for the 12 months to
April 2020 were down 4.3%,
or 177,507 MT, compared
to the same period last
year. This was driven by
large decreases in fluid
milk products, cheese and
butter, down a combined
186,532  MT.
China dairy import
volumes increased by
3.2%, or 7,818 MT, in May
compared to the same
period last year.
The increase was the result
of higher volumes of whey,
WMP, and lactose, up a
combined 31,351 MT, and
partially offset by a decrease
in fluid milk products of
14,084  MT.
Imports for the 12 months to
May were up 6.2%, driven by
fluid milk products and WMP.
LATIN AMERICAASIAMIDDLE EAST & AFRICACHINA
1 Estimates are included for those countries that have not reported data.
%
%
%%%
%%
Change for April 2020
compared to April 2019
Change for May 2020
compared to May 2019
Change for April 2020
compared to April 2019
Change for April 2020
compared to April 2019
Change for the 12 months
to April 2020
Change for the 12 months
to April 2020
Change for the 12 months
to April 2020
3.2
14.712.0
5.04.3
%
Change for the 12 months
to May 2020
6.2
7.1
2.7

To view a table that shows our
detailed milk collection in New
Zealand and Australia compared
to the previous season –
%
%
%%
%%
For the 2019/20 season
compared to the previous season
Season to date
1 June to 30 June
Season to date
1 June to 30 June
Season to date
1 June to 30 June
Change for June 2020
compared to June 2019
Change for June 2020
compared to June 2019
Change for June 2020
compared to June 2019
Change for June 2020
compared to June 2019
2.016.01.22.7
11.816.01.22.7
VOLUME M LITRESDAY
JUNJULAUGSEPOCTNOVDECJANFEBMARAPRMAY










5
OUR MARKETS
Fonterra Milk Collection
NEW ZEALANDNORTH ISLANDSOUTH ISLANDAUSTRALIA
New Zealand Milk Collection
Fonterra's Australia
collection in June was
6.8 million kgMS, a 2.0%
decrease on June last year.
Full season collections reached
107.8 million kgMS, down 11.8%
on the same period last season.
Volumes have been impacted by
a combination of drought, high
on-farm input costs in the first
half and the highly competitive
milk supply market, with losses
primarily to milk brokers.
Fonterra also made a conscious
decision to purchase less
third-party milk to focus on a
value-add product mix.
Good autumn conditions for
much of Australia and across
key dairy regions in Victoria and
Tasmania have improved milk
production for the 2019/20
season and the outlook for
2020/21.
North Island milk collection
in June was 11 million kgMS,
down 1.2% on June last season.
Effects of the drought have
begun to ease with some
meaningful rainfall during May
and June.
South Island milk collection
in June was 3.8 million kgMS,
up 16.0% on June last season.
The South Island saw a strong
start to the season, with milk
production well up on the
same month last year, even
allowing for the small volumes
expected at this time of
the season.
Fonterra's New Zealand
collection for the first month
of the 2020/21 season was
14.7 million kgMS, ahead
2.7% on the same month
last season. This represents
less than 1% of the full
season forecast.
A relatively mild June
across much of the country
allowed some pastures to
partially recover.
%
%

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



,
,
.
.
.
.
.
PRICE INDEX
NZD  USD
OUR MARKETS
Fonterra Global Dairy Trade Results
Fonterra GDT sales
by destination:
D
airy commodity
prices and New
Zealand dollar t
rend
Financial markets are steady
as they weigh the dichotomy
between improving economic
performances post-lockdowns,
and an increasingly worrying
picture of global health
outcomes as COVID-19
spreads further. The NZD
continues to find relative
stability around 66 US cents.
Fonterra GDT results at
last trading event
21 July 2020:
The next trading event will be held on 4 August 2020. 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)
3,233
USD
Fonterra product quantity
sold on GDT
000’ MT
23.3
NORTH ASIA (INCLUDING CHINA)
SOUTH EAST ASIA
MIDDLE EAST AND AFRICA
LATIN AMERICA
OTHER
USD 3,218/MT
0.3
WMP
USD 3,870/MT
2.8
AMF
USD 2,697/MT
0.6
SMP
USD 3,533/MT
5.0
BUTTER
USD 3,803/MT
1.1
CHEDDAR
23,295
MT
LATEST AUCTION
688,164
MT
FINANCIAL
YEAR‑TO‑DATE

7
Our Performance
The Co-operative Difference Payment
Fonterra farmers producing
sustainable, high quality
milk will be eligible for a
new payment, as Fonterra
announces important
changes to the way it pays
farmers for their milk.
From 1 June 2021, Fonterra is
introducing a Co-operative
Difference payment of up
to 10 cents per kilogram
of milk solids (kgMS) if the
farm meets the Co-op’s
on-farm sustainability and
value targets. It’s part of
the Co-op’s strategy to add
value to New Zealand milk
and responds to increasing
demand from customers
here and around the world
for sustainably-produced
dairy. The payment will be
funded out of the Farmgate
Milk Price.
“The total Farmgate Milk
Price will remain the same
across the Co-operative,
but the amount that each
individual farm is paid will
vary depending on their
contribution under The
Co-operative Difference,
in addition to the other
variables, like fat and protein,
which affect the amount
that’s paid,” says Fonterra
CEO Miles Hurrell.
“We’ve always paid our
farmers based on the value
that milk provides to the
Co-operative. The reality is
that the drivers of value are
changing, and we need to
reflect that. Our customers
want to know that the
products they are buying
are not only safe, but also
produced sustainably.
“This payment helps us meet
the changing needs of our
customers, so they continue
to choose our milk and enjoy
dairy as a sustainable and
nutritious choice.
“We want to deliver the
innovation, sustainability and
efficiency needed to make
the most difference to our
strategy and our bottom line.
It makes sense to financially
reward those farmers who
go the extra mile to help our
Co-op differentiate its milk.”
Last year Fonterra launched
The Co-operative Difference
– a straight-forward
framework to help farmers
produce high-quality,
sustainable milk and prepare
for any changes needed in
the future.
The payment will replace the
Farm Source Reward Dollars
farmers currently earn
through The Co-operative
Difference and will work on
a tiered system. The more
a farmer achieves in The
Co-operative Difference
programme, the higher
the payment will be. The
precise payment structure
will be confirmed over the
next few months following
discussions with farmers
but will be no more than
10 cents per kgMS.
Nestlé’s Robert Erhard
says, “At Nestlé, how milk
is produced matters. Now
more than ever, people
expect farmers to act as
good stewards of the land
– safeguarding the climate,
enhancing animal welfare
and carefully managing
water and the health of soils.”
“Farmers put in a lot of
effort to produce the best
quality milk possible. Over
recent years, large numbers
of farmers have spent a
significant amount of time
and money to improve
their local environment and
waterways to make their
farms sustainable for the
future. It’s great to see these
farmers distinguished and
rewarded for their efforts
to produce and deliver
a product that Fonterra
can capture the highest
value from. Through The
Co-operative Difference,
we can get better, together,”
says Northland dairy farmer
Terence Brocx.
“We’ve created this with
our Co-operative principles
in mind. All farmers
can participate in The
Co-operative Difference and
we’ll keep supporting them
through Farm Source,” says
Mr Hurrell.
“We want farmers looking
to the future, and The
Co-operative Difference
encourages them to
continue to focus on the
things that will create the
highest value milk. This
helps us create higher value
products that stand out
in the global market for
their New Zealand-ness
and the sustainable way
they’re produced.”

Our Co-op
8
Doing our bit to support
New Zealand’s small
and medium-sized
businesses
As a Co-operative owned
by 10,000 farming families,
Fonterra recognises the
enormous contribution
small and medium-sized
businesses make to
New Zealand’s economy
and it’s important the
Co-op plays its part in
supporting the country’s
economic recovery.
Since March, when
New Zealand first started
dealing with COVID-19,
Fonterra has been looking at
ways to support employees,
farmers and communities
through the pandemic and
its after-effects.
One of the ways Fonterra
could help was by paying
its 3,000 small and
medium-sized vendors
more quickly and, as of
1 July 2020, the Co-op
accelerated payments to
eligible businesses so they’re
paid within 10 days from the
receipt of invoice. Previously,
small to medium-sized
enterprises (SMEs) were paid
on the 20th of the month
following the invoice date.
Fonterra knows that getting
paid quickly helps cashflow
and keeps businesses
running smoothly and this
is a small but important way
the Co-op can support the
country’s economic recovery.
It also demonstrates
Fonterra’s commitment to
supporting New Zealand’s
regional communities.
New Zealand vendors who
Fonterra spends up to
$300,000 per annum with,
and who have fewer than
50 employees, are eligible.
That represents 86% of all
the Co-op’s New Zealand
suppliers and the goal is
to pay 95% of eligible SME
invoices within ten days of
receiving them.
Fonterra’s able to do this
because of a significant
overhaul of its vendor
payment system in the last
few years, which has seen
all vendors moved onto
electronic invoicing and
encouraging them to use
a NZ Business Number.
This has improved invoice
accuracy in the Co-op’s
system which enables
those businesses to be paid
on time.
There are quite a few things
that have to be in place to
ensure invoices are paid
quickly. For example, vendors
need to submit correct
invoices, and invoices need
to be checked in a timely
manner to ensure they
match the services delivered.
The Co-op has already been
working with vendors to
ensure their invoices are
right first time by providing
practical tips on what is
required. It has also been
impressing on its team
the importance of prompt
processing of invoices and
the flow-on effect this has
for vendors.
The Co-op moved fast
to accelerate payments
to better serve business-
owners and New Zealand’s
economy. It demonstrates
Fonterra’s commitment
to working with and
supporting New Zealand’s
local communities, not
only during COVID-19,
but beyond.

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
SEP AUG JUN MAY FEB MAR APR NOV JAN DEC JUL OCT 
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 and Australia to May; New Zealand and US to June.
NOTE: Data for EU to April; New Zealand, Australia and US to May.
NOTE: Data for Asia, Middle East & Africa and Latin America to April; China to May.
SOURCE: Government milk production statistics/GTIS trade data/Fonterra analysis.

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


,

,


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,

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,

,

,

,

,

,

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)
JUNE
2020
JUNE

2019
MONTHLY
CHANGE
SEASON-
TO-DATE
2020/21
SEASON-
TO-DATE
2019/20
SEASON-
TO-DATE
CHANGE
Total Fonterra
New Zealand
14.814.42.7%14.814.42.7%
North Island11. 011. 1(1.2%)11. 011. 1(1.2%)
South Island3.83.316.0%3.83.316.0%
MILK COLLECTION
(MILLION KGMS)
JUNE
2020
JUNE

2019
MONTHLY
CHANGE
SEASON-
TO-DATE
2019/20
SEASON-
TO-DATE
2018/19
SEASON-
TO-DATE
CHANGE
Fonterra Australia6.87.0(2.0%)107.8122.2(11. 8%)
Fonterra GDT results
This table provides more
information on the latest
results, including a snapshot
of the year-to-date results.
LAST TRADING EVENT
(21 JULY 2020)
YEAR-TO-DATE

(FROM 1 AUGUST 2019)
Quantity Sold on GDT
(Winning MT)
23,295688,164
Change in Quantity Sold on GDT
over same period last year
(2.9%)1.8%
Weighted Average Product Price
(USD/MT)
3,2333,269
Change in Weighted Average
Product Price over same period
last year
(6.3%)5.1%
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 Products
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.
MENA
Middle East – North Africa.
MPC
Milk Protein Concentrate.
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.

Glossary
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.
WPC
Whey Protein Concentrate