How are 3 NZX dairy stocks faring in 2022?

Highlights

• The NZ dairy sector is known for supplying world-class quality milk products to its global customers.
• Synlait Milk enters into a unique partnership to study soil health and explore benefits of regenerative practices.
• Fonterra Co-operative Group witnesses a new appointment on its milk panel on the recommendation of the country’s Agriculture Minister.

As per reports, New Zealand is one of the leading milk producers across the world, boasting of supplying quality dairy products globally.

Kiwis consume around 400 million litres of milk every year, and reports reveal that the nation has the third-highest consumption of fresh white milk per capita worldwide, and every minute, nearly 190 two-litre bottles of milk are sold across NZ supermarkets.

However, this much-loved nutritional health drink is never equipped with any discount or special prices.

The prime reason can be attributed to Fonterra’s monopoly, which constitutes about 80% of the country’s total dairy exports and supermarkets’ duopoly.

Another reason as to why discounts are generally not associated with milk is that it is a popular product forming the staple diet of the majority of NZers, both dairy companies as well as supermarkets, ensure their best to offer competitive rates while working in close collaboration with farmers and milk suppliers.

With this backdrop, let us look at the three popular dairy stocks worth considering this year.

Source: © 2022 Kalkine Media® data source- EODHD/Others

The a2 Milk Company Limited (NZX:ATM; ASX:A2M)

New Zealand’s globally acclaimed premium dairy company is The a2 Milk Company Limited. Last month, it revealed its long-term incentive plan and employee share plan funding, which was offered to its trustee, Pacific Custodians Pty Limited.

Related Read: Would The a2 Milk’s (NZX:ATM) latest strategy drive growth across multiple horizons?

Under the plan, a funding of NZ$4.11 million was given to the trustee to acquire up to 600,000 shares of ATM to reduce dilutionary share issues to the employees.

At the closing bell on 7 December, The a2 Milk Company gained by 0.35% at NZ$5.760.

Synlait Milk Limited (NZX:SML)

Synlait Milk Limited supplies a range of nutritional milk products across the globe. Some time ago, the Company disclosed its unique partnership with renowned multi-local food and beverage company-Danone, science provider AgResearch and the MPI, i.e., the Ministry for Primary Industries, to study soil health across NZ farms.

Must Read: Synlait (NZX:SML): Why did it strike a deal with Danone?

The study slated for over five years on 10 dairy farms would investigate impacts of changes in soil health and its implications on-farm production and further test regenerative agriculture practices.

At the closing bell on 7 December, Synlait Milk dipped by 0.57% at NZ$3.460.

Fonterra Co-operative Group Limited (NZX:FCG)

Another prominent dairy company of NZ is Fonterra Co-operative Group Limited. Recently, the Group announced the appointment of Professor Hamish Gow to its Milk Price Panel, who was nominated to the panel by the country’s Agriculture Minister, Damien O’Connor.

Interesting Read: Fonterra (NZX:FCG): What were the highlights of Annual Meeting 2021?

It is noted that according to the Dairy Industry Restructuring Act 2001, a nominee by the Minister of Agriculture must be appointed to FCG’s panel.

At the closing bell on 7 December, Fonterra Co-operative Group traded flat at NZ$2.980.

Bottom Line

New Zealand’s dairy sector is a highly advanced, mechanised and major contributor to the nation's GDP.