Global Dairy Update October 2020

• Fonterra agrees to sell China farms.
• Measuring greenhouse gas emissions farm by farm.
1
Global Dairy
UPDATE
• New Zealand production in line with last
season. Favourable start to Australia’s new
season. US monthly production increases,
EU softens.
• US and EU exports continue to increase.
Significant increase in New Zealand and
Australia monthly exports.
• Latin America monthly imports decline.
Middle East and Africa, China and Asia
imports increase.
• Fonterra’s New Zealand milk collection
reached 314 million kgMS which accounts
for around 20% of forecast total
season production.
• Fonterra's Australia milk collection for
September increased 1.3% compared to last
season, to 10.9 million kgMS.
• New Zealand's first plant-based milk bottle.
Key Dates
5 November 2020
Fonterra Co-operative Group
Annual Meeting
9 November 2020
Fonterra Shareholders' Fund
Annual Meeting
4 December 2020
FY21 Q1 Business Update
20 April 2021
Compliance Date for
2020/21 Season
OCTOBER 2020

%
%
%%
%
%
%%
Change for September 2020
compared to September 2019
Change for September 2020
compared to September 2019
Change for August 2020
compared to August 2019
Change for August 2020
compared to August 2019
Change for the 12 months
to September 2020
Change for the 12 months
to September 2020
Change for the 12 months
to August 2020
Change for the 12 months
to August 2020
2.33.51.6
1.40.11.7
0.1
0.1
2
OUR MARKETS
Global Production
New Zealand production
in line with last season.
Favourable start to
Australia’s new season.
US monthly production
increases, EU softens
New Zealand milk
production¹ increased 1.6%
on a litres basis in September
compared to September
last year.
Following a favourable
start to the season, milk
production growth has eased
in September as a result of
dry weather across most of
the North Island and a cold
snap in the South Island.
New Zealand milk
production for the 12 months
to September was 0.1%
higher than last year.
Fonterra collections are
reported for September, see
page 5 for details.
Australia milk
production increased
3.5% in August compared to
August last year.
Milk production is increasing
as most regions have
benefitted from rain, despite
parts of Queensland starting
to dry and more moisture
is needed.
Dairy Australia has forecast
a 1% to 3% increase
in production for the
2020/21 season.
Australia milk production for
the 12 months to August was
1.4% higher than last year.
Fonterra collections in
Australia are reported for
September, see page 5
for details.
EU (including UK) milk
production increased by
0.1% in August compared to
the same period last year.
The modest increase in
production was led by Poland
(up 2%) and Ireland (2.9%)
but largely offset by declines
from key producing countries
such as the Netherlands
(down 1.5%), Germany
(0.8%), France (0.9%)
and UK (0.9%) as a result
of heatwaves impacting
milk collections.
EU milk production for the 12
months to August was down
by 0.1% compared to the
same period last year.
US milk production
increased by 2.3% in
September, compared to the
same period last year.
Stronger milk per cow and
recovering herd sizes are
driving the higher US milk
production in September.
Milk production for the 12
months to September was
1.7% 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
US and EU exports continue
to increase. Significant
increase in New Zealand and
Australia monthly exports
Total New Zealand dairy
exports increased by 13.8%,
or 17,973 MT, in August
compared to the same
period last year.
Exports increased in August,
driven mainly by higher
WMP shipments to China,
up 15,599 MT, and cheese
to Japan and China, up
4,737  MT.
Exports for the 12 months
to August were down by
1.2%, or 40,505 MT, on the
previous comparable period.
This was primarily driven
by SMP, fluid milk products,
infant formula and AMF but
offset by increases in WMP.
EU (including UK)
dairy exports increased
by 10.8%, or 54,391 MT, in
July compared to the same
period last year.
This was driven by
increases across most
product categories but
more specifically, fluid milk
products and whey to China,
cheese to Japan, and WMP
to Algeria.
Exports for the 12 months
to July were up 6.1%, or
335,963 MT, on the previous
comparable period. Butter,
cheese, fluid milk products
and whey were the main
drivers of this growth, up a
combined 323,682 MT. This
was partially offset by a
decline in SMP of 77,443  MT.
US dairy exports
increased 14.7%, or 21,372  MT,
in August compared to the
same period last year.
Exports continue to grow for
the 12th consecutive month,
with large volumes of SMP
to South East Asia, cheese to
Mexico, and whey to China as
China rebuilds its inventory
levels and hog herds following
last year’s African swine flu.
Exports for the 12 months to
August 2020 were up 12.2%,
or 271,027 MT, on the previous
comparable period, driven by
SMP, WPC and lactose, up a
combined 240,622  MT.
Australia dairy exports
increased by 32.6%, or
16,720 MT, in August
compared to the same
period last year.
This was primarily driven
by fluid milk products, SMP
and cheese to China, up a
combined 15,222  MT.
Exports for the 12 months to
August were down 5.8%, or
45,323 MT, on the previous
comparable period.
Declines were recorded
across a broad range of
products with infant formula,
SMP, WMP, cheese, and whey
down a combined 53,555  MT,
and partially offset by fluid
milk products, up 11,922  MT.
NEW ZEALANDAUSTRALIAEUROPEAN UNION/UKUSA
%
%
%%
%
%
%%
Change for August 2020
compared to August 2019
Change for August 2020
compared to August 2019
Change for August 2020
compared to August 2019
Change for July 2020
compared to July 2019
Change for the 12 months
to August 2020
Change for the 12 months
to August 2020
Change for the 12 months
to August 2020
Change for the 12 months
to July 2020
14.732.613.8
5.86.112.2
10.8
1.2

To view a chart that
illustrates year-on-year
changes in imports –
4
OUR MARKETS
Global Imports
Latin America monthly
imports decline. Middle East
and Africa, China and Asia
imports increase
Latin America dairy
import volumes¹ decreased
26.4%, or 42,993 MT, in July
compared to the same period
last year. This was driven
by lower volumes of SMP
to Mexico.
Imports for the 12 months to
July 2020 were down 4.2%,
or 74,752 MT, compared
to the same period the
previous year.
Decreases were driven
primarily by WMP, infant
formula, SMP and butter,
down a combined 66,863  MT.
Asia (excluding China
)
dairy import volumes¹
increased 1.7%, or 7,139 MT,
in July compared to the
same
period last year. Increases
were recorded primarily in
SM
P to South East Asia,
l
actose to India and the
Philippines, up a combined
24,873 MT, and partially offset
by lower imports of WMP
a
nd whey.
I
mports for the 12 months
to July were down 3.8%, or
193,180 MT, compared to the
sa me period the previous year.
D
ecreases were recorded
across WMP, SMP, fluid
products, down a combined
228, 306 MT, and offset
partially by increased volumes
of lactose, up 46,394 MT.
Middle East and Africa
dairy import volumes¹
increased 10.1%, or 28,764 MT
in July 2020 compared to
the same period last year.
Increases were driven
principally by higher volumes
of WMP to Algeria and SMP
to Ethiopia and Saudi Arabia,
up a combined 39,653  MT,
and partially offset by
lower volumes of fluid milk
products and infant formula.
Imports for the 12 months to
July 2020 were down 7.5%, or
300,703 MT, compared to July
last year, driven by decreases
in fluid milk products,
infant formula, butter and
cheese, down a combined
424,952 MT, and offset by
increases in SMP.
China dairy import
volumes increased by 7.8%,
or 20,619 MT, in August
compared to the same
period last year.
The increase was the result
of higher volumes of fluid
milk products and whey, up a
combined 32,226 MT. China
is working towards rebuilding
its hog herds and hence
increasing its whey imports
for feed consumption. WMP
imports continued to decline,
likely due to high levels
of inventories.
Imports for the 12 months
to August were up 8.3%,
or 252,529 MT, driven by
fluid milk products, whey
and WMP.
LATIN AMERICAASIAMIDDLE EAST & AFRICACHINA
1 Estimates are included for those countries that have not reported data.
%
%
%%
%
%
%
Change for July 2020
compared to July 2019
Change for August 2020
compared to August 2019
Change for July 2020
compared to July 2019
Change for July 2020
compared to July 2019
Change for the 12 months
to July 2020
Change for the 12 months
to July 2020
Change for the 12 months
to July 2020
7.8
1.726.4
3.87.5
%
Change for the 12 months
to August 2020
8.3
10.1
4.2

To view a table that shows our
detailed milk collection in New
Zealand and Australia compared
to the previous season –
%
%
%%
%%
Season to date
1 July to 30 September
Season to date
1 June to 30 September
Season to date
1 June to 30 September
Season to date
1 June to 30 September
Change for September 2020
compared to September 2019
Change for September 2020
compared to September 2019
Change for September 2020
compared to September 2019
Change for September 2020
compared to September 2019
1.31.01.20.4
0.30.82.01.6
VOLUME M LITRESDAY
JUNJULAUGSEPOCTNOVDECJANFEBMARAPRMAY










5
OUR MARKETS
Fonterra Milk Collection
NEW ZEALANDNORTH ISLANDSOUTH ISLANDAUSTRALIA
New Zealand Milk Collection
Fonterra's Australia
collection was 10.9 million
kgMS, a 1.3% increase on
September last season.
Fonterra collections across
Australia for the three months
to 30 September reached
23.2 million kgMS, flat on the
same period last season.
The La Niña weather system
is delivering wetter and cooler
conditions, and this is starting
to hamper pasture production,
silage and fodder harvest.
However, the La Niña is also
delivering a much needed
recovery in soil moisture
profiles and water storage.
North Island milk
collection in September was
113.5 million kgMS, up 1.2% on
last September.
Season-to-date collection was
215.1 million kgMS, up 2.0% on
last season
Overall, North Island
production for the month
and season-to
-
date remained
ahead of the prior season.
The upper North Island was
classified as extremely dry
with less than half of normal
rainfall for September.
South Island milk collection
in September was 66.3 million
kgMS, down 1.0% on
September last season.
Season-to-date collection was
99.3  million kgMS, up 0.8% on
last season.
Heavy snowfall in the last
few days of September
hampered collection across
the Southland/Otago region
and this is reflected in the
decrease in September
South Island collections.
Fonter
ra's New Zealand
collection for September was
179.8  million kgMS, up 0.4%
on
last September.
S
eason-to-date collection to
the end of September was
314.4  million kgMS, up 1.6% on
the same point last season.
September milk production
is largely in line with the
prior season, reflecting
the good early season
conditions this year, partially
offset by the impact of late
S
eptember snow in the lower
South Island.
Conditions became
in
creasingly dry across the
m
onth, particularly in the
northern and eastern regions
of both islands. Production has
begun to flatten in October as
a
result of the continuation of
these dry conditions.
%
%

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





, 
,
.
.
.
.
.
PRICE INDEX
NZD  USD
OUR MARKETS
Fonterra Global Dairy Trade Results
Fonterra GDT sales
by destination:
Dairy commodity
prices and New
Zealand dollar trend
Global economies, including
New Zealand, continued to
recover from the considerable
collapse experienced as a
result of COVID-19 and the
implementation of associated
lockdown measures. This return
toward economic normality
resulted in relative stability for
the NZD and financial markets.
Fonterra GDT results at
last trading event
20 October 2020:
The next trading event will be held on 3 November 2020. Visit www.globaldairytrade.info for more information.
Change in Fonterra’s
weighted average product
price from previous event
0.3
Fonterra’s weighted
average product price

(USD/MT)
3,179
USD
Fonterra product quantity
sold on GDT
000’ MT
33.9
NORTH ASIA (INCLUDING CHINA)
SOUTH EAST ASIA
MIDDLE EAST AND AFRICA
LATIN AMERICA
OTHER
USD 3,803/MT
2.9
CHEDDAR
USD 2,872/MT
0.5
SMP
USD 3,037/MT
0.1
WMP
USD 4,110/MT
0.5
AMF
USD 3,678/MT
3.3
BUTTER
33,926
MT
LATEST AUCTION
198,525
MT
FINANCIAL
YEAR‑TO‑DATE

7
Our Performance
Fonterra agrees to sell
China farms
Fonterra has agreed to
sell its China farms for
a total of $555 million
(RMB 2.5 billion¹), after
successfully developing
the farms alongside
local partners.
Inner Mongolia Natural
Dairy Co., Ltd, a subsidiary of
China Youran Dairy Group
Limited (Youran), has agreed
to purchase Fonterra’s
two farming-hubs in Ying
and Yutian for $513 million
(RMB 2.31 billion¹).
Separately, Fonterra has
agreed to sell its 85%
interest in its Hangu farm
to Beijing Sanyuan Venture
Capital Co., Ltd. (Sanyuan),
for $42 million (RMB
190 million¹). Sanyuan has a
15% minority shareholding
in the farm and exercised
their right of first refusal to
purchase Fonterra’s interest.
CEO Miles Hurrell says
in building the farms,
Fonterra has demonstrated
its commitment to the
development of the Chinese
dairy industry.
“We’ve worked closely
with local players, sharing
our expertise in farming
techniques and animal
husbandry, and contributed
to the growth of the industry.
“We don’t shy away from
the fact that establishing
farms from scratch in China
has been challenging, but
our team has successfully
developed productive
model farms, supplying high
quality fresh milk to the
local consumer market. It’s
now time to pass the baton
to Youran and Sanyuan to
continue the development of
these farms.”
Mr Hurrell says the sale
of the farms will allow the
Co-op to prioritise the areas
of its business where it has
competitive advantages.
“For the last 18 months,
we have been reviewing
every part of the business
to ensure our assets and
investments meet the needs
of the Co-op today. Selling
the farms is in line with our
decision to focus on our
New Zealand farmers’ milk.
“China remains one of
Fonterra’s most important
strategic markets, receiving
around a quarter of our
production. Selling the farms
will allow us to focus even
more on strengthening our
Foodservice, Consumer
Brands and Ingredients
businesses in China.
“We will do this by
bringing the goodness of
New Zealand milk to Chinese
customers in innovative
ways and continuing to
partner with local Chinese
companies to do so. Our
investment in R&D and
application centres in China
will support this direction,”
says Mr Hurrell.
Completion of the sale,
which is subject to anti-
trust clearance and other
regulatory approvals in
China, is expected to occur
within this financial year.
As previously announced,
through the sale process and
strategic review of our China
Farms we gained additional
information and further
insights and, as a result,
revised down the valuation
of these assets.
The transaction value
is subject to customary
purchase price adjustments,
and exchange rate
movements. Any gains or
losses on the sale would be
normalised upon completion
of the sale².
Fonterra expects to use the
cash proceeds from the two
transactions to pay down
debt, as part of its previously
announced overall debt
reduction programme.
1 Based on an RMB to NZD conversion rate of 4.5.
2 The announced forecast earnings will continue to reflect only the underlying performance of the business.

8
Our Performance
Measuring greenhouse
gas emissions,
farm by farm
They’re hot off the press and
intended to help take the
heat out of climate change.
Fonterra farmers are already
among the world’s most
sustainable producers
of milk and now have an
additional tool in their
sustainability toolbox.
Over the last few days,
Fonterra farmers have
been receiving unique
Greenhouse Gas (GHG)
emissions profiles for their
farms – the first time such
a tool has been introduced
in New Zealand at scale.
The profiles form part of
a Farm Environmental
Report – which combines a
GHG Report and Nitrogen
Risk Scorecard.
Fonterra Director
On-Farm Excellence,
Charlotte Rutherford, says
the reports are designed
to provide useful insights
for farmers to help
identify opportunities for
improvements on farm –
providing indicators such
as the estimated level of
biological methane and
nitrous oxide emissions per
hectare, and the amount of
emissions per kilogram of
milk solids.
“One of the most important
steps in improving your
emissions profile is
understanding where your
emissions come from, and
that’s what this report does.
“As well as being a very
practical step toward helping
New Zealand meet climate
change commitments,
the Environmental Report
supports our strategy to
meet growing global demand
for food that’s kind to
the planet.
“New Zealand milk is already
among the most sustainably
produced in the world, but
with increasing customer
and consumer motivation
linked to climate change,
we need to ensure we’re
continuing to position
ourselves for the future –
from both a regulatory and
market perspective.
“Today 81% of consumers
feel strongly that companies
should help improve
the environment¹. Our
customers are responding
to this by setting some
bold goals to reduce their
emissions profile over the
coming years and there’s an
opportunity for farmers to
support them. For example,
Nestlé has a target for net
zero emissions by 2050 and
Starbucks aims to reduce
carbon emissions by 50% by
2030,” says Charlotte.
Once the reports are in
farmers’ hands, the focus
will turn to implementing
practical and sensible
solutions to help
reduce emissions.
South Wairarapa Farmer
Aidan Bichan is one of
around 100 farmers who
took part in the original
pilot in 2018. Aidan runs
a 900-cow dairy farm
near Featherston and says
knowing his farm emissions
profile prompted his team
to make some practical
changes, including halving
the amount of nitrogen
fertilizer applied on farm.
“It hasn’t really impacted
production because we’re
getting more efficient use of
that nitrogen. We’ve changed
the timing and the rate of
application, and we’re a lot
more careful about how we
use it.”
1 https://www.nielsen.com/us/en/insights/report/2018/the-education-of-the-sustainable-mindset (Nielson).

Our Co-op
9
New Zealand’s first
plant-based milk bottle
Anchor™ has added to its
Blue range, with a new
plant-based 2L bottle. It’s
made from sugarcane, which
is natural, renewable and
sustainably-sourced and a
great alternative to bottles
made from non-renewable
sources like fossil fuels.
The benefits continue –
sugarcane captures CO₂
from the atmosphere as it
grows, resulting in a bottle
that also has a low carbon
footprint – around 85% less
climate change impact in
terms of CO₂ than one made
using fossil fuels.
The sugarcane is made into
plant-based HDPE plastic in
Brazil and the bottle itself
is made in New Zealand.
The plant-based milk
bottle is 100% kerbside
recyclable, which aligns with
Fonterra’s commitment to
have all packaging reusable,
recyclable or compostable
by 2025.
According to research from
the Sustainable Business
Council, 71% of Kiwis are
actively researching the
sustainability practices of
brands before making a
product purchase. We know
sustainability is important
to New Zealanders and we
want to give consumers
an option to make change
for good.
The plant-based bottle
follows hot on the heels
of Anchor™’s launch of
Simply Milk in July, which
is New Zealand’s first
carbonzero milk.
This plant-based milk
bottle is also an important
component in the
Co-operative’s wider
sustainability strategy. We
have committed to moving
towards renewable energy in
transport and manufacturing
and finding ways to manage
and reduce our emissions
over the whole supply chain.
Research into the new
bottle shows that people
are looking for products that
are sustainably produced
and they liked the plant-
based bottle concept versus
traditional fossil fuel based
plastic alternatives.
Anchor™ has been part of
New Zealand communities
for 134 years and during this
time it has innovated with a
range of different milks and
new packaging that respond
to changing consumer needs.
Initially the new plant-based
milk bottle is available in
supermarkets, dairies and
convenience stores and
cafes across New Zealand’s
North Island – with a view
to expand distribution and
product ranging based on
consumer response.
An independent life cycle
assessment of the bottle
has also concluded this
plant-based plastic HDPE
also has a lower carbon
footprint than conventional
fossil fuel-based HDPE,
which most plastic milk
bottles in New Zealand are
made from.
To verify our sustainability
claims and help make
this information more
accessible and transparent
to consumers, each Anchor™
plant-based bottle will
have a unique QR code,
that will take consumers
to the Provenance.org
platform, a market leader in
supply chain transparency.
Here, consumers can see
the story and the facts
behind our plant based
bottle and broader
sustainability initiatives.

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











,
EXPORTS
AUSTRALIA
UNITED STATES
NEW ZEALANDEUUK
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
10

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/UK and Australia to August; New Zealand and US to September.
NOTE: Data for EU/UK to July; New Zealand, Australia and US to August.
NOTE: Data for Asia, Middle East & Africa and Latin America to July; China to August.
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 

,


,

,

,


,

,

,

,

,

,

,

,

WEIGHTED AVERAGE PRICE USDMT
QUANTITY SOLD  MT
11

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)
SEPTEMBER
2020
SEPTEMBER

2019
MONTHLY
CHANGE
SEASON-
TO-DATE
2020/21
SEASON-
TO-DATE
2019/20
SEASON-
TO-DATE
CHANGE
Total Fonterra
New Zealand
179.8179.10.4%314.4309.41.6%
North Island113.5112.11.2%215.1210.92.0%
South Island66.366.9(1.0%)99.398.50.8%
Australia10.910.81.3%23.223.20.3%
Fonterra GDT results
This table provides more
information on the latest
results, including a snapshot
of the year-to-date results.
LAST TRADING EVENT
(20 OCTOBER 2020)
YEAR-TO-DATE

(FROM 1 AUGUST 2020)
Quantity Sold on GDT
(Winning MT)
33,926198,525
Change in Quantity Sold on GDT
over same period last year
(10.8%)(8.7%)
Weighted Average Product Price
(USD/MT)
3,1793,088
Change in Weighted Average
Product Price over same period
last year
(5.2%)(6.7%)
Change in Weighted Average
Product Price from previous event
0.3%–
Fonterra GDT results
This chart shows Fonterra
GDT prices and volumes over
the past 12 months.

12
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.
NZMP
New Zealand Milk Products.
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