New South Island-based milk-sourcing company is entering the dairy sector, backed by Fonterra.
Mymilk, which is based in Christchurch, will operate as a stand-alone entity to compete with other milk processors for milk supply.
Applications would initially be invited from farms not supplying Fonterra in Canterbury, Otago and Southland, for one-year contracts renewable for a maximum of five years, without the obligation to purchase Fonterra shares.
At any time, suppliers could apply to join the co-operative, purchase shares and supply Fonterra directly.
Various new dairy companies have opened up, attracting dairy farmers away from Fonterra as they did not demand the farmers buy shares in the company before supplying their milk.
Mymilk chief executive Richard Allen said the company's launch was a ''pragmatic response'' to recent dynamics in the industry.
In the same way that young families faced the challenge of raising equity to buy their first home, new dairy farmers faced many costs and needed time to raise the equity to ''share up'' into Fonterra.
The new company gave farmers the time to build their equity while also having the reliability arising from supplying a company backed by Fonterra, Mr Allen said.
In an increasingly competitive milk sourcing environment, it was important that farmers could support Fonterra and then apply to become shareholders, Fonterra chairman John Wilson said.
Mymilk volumes would be limited to 5% of Fonterra's total volumes. Contract prices paid by mymilk would be competitive but not more than the farmgate milk price paid to Fonterra shareholders, Fonterra chief executive Theo Spierings said.
The initiative would deliver value to existing Fonterra shareholders by increasing volumes of milk to support Fonterra's global ambition, help improve asset and supply chain utilisation, achieve transport efficiencies by targeting milk near factories, providing incremental milk for capacity investments, and attract potential new shareholders for the future, he said.
