Thursday, 26 November 2015 11:04

Drop in production keeps focus on high value products

Written by 
Westland Milk Products chief executive Rod Quin. Westland Milk Products chief executive Rod Quin.

Westland Milk Products says its 2.5% drop in peak milk processing has meant more capacity available for the cooperative and its shareholders, enabling more focus on added-value product.

Chief executive Rod Quin today confirmed that Westland hit peak mid November. In total, Westland processed 3.84 million litres of milk by peak flow, compared with 3.93 L the season prior.

"This slight drop, combined with our new dryer seven coming into commercial production meant we had greater capacity to put more of the peak milk flow into higher value products," says Quin.

"In previous years peak milk has all been channelled into bulk milk powders to maintain throughput, which give a lower return compared to products such as infant formula.

Based on the current demand from infant formula customers, we expect the end of season results will show that we have sold more value-add product at a higher profit margin."

Quin notes that the trend for reduced production at Westland and across the New Zealand dairy industry as a whole is expected to continue and global markets should not be banking on New Zealand lifting or even maintaining its production this season.

The predicted El Nino weather pattern in the coming months is also likely to keep production down, says Quin. Canterbury farms are expected to face dryer conditions and possible irrigation restrictions, while West Coast Farms are predicted to experience a wetter and colder season – both tending to result in less milk coming off-farm.

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