Fonterra Shareholders Fund : Global Dairy Update March 2022

MARCH 2022

Global Dairy UPDATE

• • Monthly production declines continue across all regions.

• • New Zealand monthly exports flat, Australia exports increase. US and EU monthly exports decline.

• • China, Middle East and Africa, Latin America and Asia monthly imports increase.

• • Fonterra New Zealand milk collection for February was 126.9 million kgMS, down 7.0% on February the prior season.

• • Fonterra Australia milk collection for February was 7.6 million kgMS, up 4.9% on February last season.

Key Dates

May 2022

FY22 Q3 Business Update

1 June 2022

Start of the 2022/23 Season

• • NZMP's Organic Butter - Carbonzero™ Certified wins second innovation award.

• • On 17 March, Fonterra announced its 2022 Interim Results.

  For further details, view our website -

• • Fonterra set to be home to New Zealand's first electric milk tanker.

31 July 2022

End of FY22 Financial Year

1

Global Production

Monthly production declines continue across all regions

To view a chart that illustrates year-on-year changes in production -

NEW ZEALAND

New Zealand milk production¹ decreased 8.2% on a litres basis, (down 7.2% on milk solids basis)

in February compared to February the year prior. Drought conditions early in the month were replaced by mixed weather with above average rainfall. This contributed towards improved soil moisture and milk production towards the end of February.

New Zealand milk production for the 12 months to February was down 1.7% on the year prior.

Fonterra New Zealand collections are reported for February, see page 5 for details.

• 1 New Zealand production is measured in litres.

• 2 Excludes UK.

AUSTRALIA

Australia milk production decreased 6.3% in January compared to January the year prior.

Production was impacted by summer rainfall deficits, and COVID-related labour and supply chain challenges.

Australia milk production for the 12 months to January was 1.7% lower than the year prior.

Dairy Australia and Rabobank have lowered their current season forecasts, Rabobank to -1.8% and Dairy Australia to "unlikely to see growth".

Fonterra collections in Australia are reported for February, see page 5 for details.

EUROPEAN UNION

EU milk production² decreased 1.5% in December compared to the same period the year prior.

Lower production volumes year-on-year were driven by Germany, Netherlands and France but partially offset by an increase in Italy and Poland.

EU milk production for the 12 months to December was down 0.2% compared to the same period the year prior, driven by declines in Germany, Netherlands and France and offset by increases in Italy and Ireland.

USA

US milk production decreased by 1.0% in February, compared to the same period the year prior.

Smaller herd size remained a key driver of the decline year-on-year. However, compared to prior month, herd sizes grew for the first time in eight months. Milk yield per cow yield remained low as a result of high feed costs.

Milk production for the 12 months to February was 1.0% higher compared to the same period the year prior.

Global Exports

New Zealand monthly exports flat, Australia exports increase.

US and EU monthlyexports decline

To view a chart thatillustrates year-on-year changes in exports -

NEW ZEALAND

73.3%6.0%

22.2%Change for the 12 months to December 2021

Total New Zealand dairy exports were flat in February compared to the same period the year prior.

Stronger shipments of SMP to South East Asia and Libya, and butter and fluid milk products to China, were observed year-on-year, but offset by lower shipments of WMP to China.

Exports for the 12 months to February were up by 2.1%, or 72,964 MT, compared to the same period the year prior. This was primarily driven by increases in fluid milk product, WMP, and cheese but partially offset by declines in AMF and infant formula.

AUSTRALIA

Australia dairy exports increased 73.3%, or 40,148 MT, in January compared to the same period the year prior.

January exports were higher than normal and driven by high demand from China for fluid milk products, and limited supply available from New Zealand, up 23,961 MT year-on-year. Increases in SMP and cheese exports were also observed.

Exports for the 12 months to January were up 22.2%, or 167,870 MT, compared to the same period the year prior.

This was predominantly driven by increases in fluid milk products, and also SMP and WMP.

EUROPEAN UNION

EU dairy exports decreased 6.0%, or 35,473 MT, in December compared to the same period the year prior.

Lower exports of cheese, SMP and cultured products, down a combined 27,747 MT, were partially offset by stronger demand for fluid milk products and MPC.

Exports for the 12 months to December were down 1.3%, or 92,805 MT, compared to the same period the year prior, driven by declines in infant formula, cultured products, WMP, SMP and partially offset by increases in fluid milk products and whey.

USA

US dairy exports decreased 2.9%, or 5,611 MT, in January compared to the same period the year prior. This is the second consecutive month of lower exports following 10 months of year-on-year gains.

Lower shipments of whey to China and SMP to Mexico were partially offset by an increase in demand for cheese to Mexico and Australia, and lactose to China and the Philippines.

Exports for the 12 months to January 2022 were up 10.3%, or 258,327 MT, compared to the same period the year prior, driven by SMP, cheese, whey, lactose, and fluid milk products, up a combined 238,541 MT.

Global Imports

To view a chart that illustrates year-on-year changes in imports -

LATIN AMERICA

Latin America dairy import volumes¹ increased 5.5%, or 9,848 MT, in December compared to the same period the year prior.

The increase was driven by higher demand for cheese and whey to Mexico and SMP to Colombia, Honduras and Dominican Republic.

Imports for the 12 months to December were up 3.5% compared to the same period the year prior, driven by higher volumes of cheese, whey, SMP and infant formula.

China, Middle East and Africa, Latin America and Asia monthly imports increase

ASIA

Asia (excluding China) dairy import volumes¹ increased 6.6%, or 25,808 MT, in December compared to the same period the year prior.

The increase was driven by higher demand for whey to Indonesia, SMP to Philippines and WPC to Japan.

Imports for the 12 months to December were up 0.4%, or 21,255 MT, compared to the same period the year prior, driven by higher volumes of whey, cheese and fluid milk products and partially offset by a decrease in WMP.

MIDDLE EAST & AFRICA

Middle East and Africa dairy import volumes¹ increased 10.6%, or 42,460 MT, in December compared to the same period the year prior.

The increase was predominantly driven by higher volumes of fluid milk products to Libya and Iraq, cheese to Iraq and SMP to Libya and Egypt. This was partially offset by lower demand for infant formula from Nigeria.

Imports for the 12 months to December were up 5.6%, or 270,960 MT, compared to December the year prior, driven by increases in fluid milk products, cheese and cultured products.

CHINA

China dairy import volumes increased by 3.2%, or 8,321 MT, in February compared to February the year prior.

Strong demand of WMP was observed in February and sourced from New Zealand, South America and Europe. AMF and butter imports also increased year-on-year, primarily from New Zealand. This was largely offset by a continuing weaker demand for whey.

Imports for the 12 months to February were up 12.3%, or 448,937 MT, driven by WMP, fluid milk products and SMP, partially offset by decreases in infant formula.

1 Estimates are included for those countries that have not reported data.

Fonterra Milk Collections

To view a table that shows detailed milk collections in New Zealand and Australia comparedto the previous season -

NEW ZEALAND

Fonterra's New Zealand collections for February were 126.9 million kgMS, 7.0% lower than last February.

Season-to-date collections were 1,159.6 million kgMS, 4.0% behind last season.

Hot, dry weather continued into the first week of February across most of the country before being interrupted with drought-breaking rain through the middle of February. Disruptive weather, including a cyclone and flooding, impacted feed availability in many regions. Milk volumes recovered following more normal weather conditions through the second half of the month.

New Zealand Milk Collection

VOLUMEMLITRESDAY



JUNJULAUG

NORTH ISLAND

North Island milk collections in February were 67.3 million kgMS, 8.9% lower than February last season.

Season-to-date collections were 697.3 million kgMS, 4.6% behind last season.

North Island milk collections have been stronger in general throughout the back half of this month, approaching last year's favourable milk volumes on a day-to-day basis.

SEPOCTNOVDECJAN

SOUTH ISLAND

South Island milk collections in February were 59.6 million kgMS, 4.8% lower than last February.

Season-to-date collection were 462.3 million kgMS, 3.1% behind last season.

The South Island had steep declines in milk collections throughout February. Hot, dry weather in the early period preceded unseasonable colder, wetter conditions, causing larger decreases compared to last February.

FEBMARAPRMAY

AUSTRALIA

Fonterra's Australia collections for February were 7.6 million kgMS, a 4.9% increase on February last season as both third party volumes and farm collections increased year-on-year.

The increased farm intake was predominantly due to new suppliers that have joined Fonterra this season.

Fonterra collections across Australia for the eight months for the season to date were 75.2 million kgMS, a 1.1% decline on last season.