NZ remains lowest-cost milk producer - report
The cost of producing milk in New Zealand continues to compare favourably with other exporting regions despite a lift in production costs over the past five years.
Open Country Dairy is paying its suppliers $9.84/ kgMS for milk supplied between February and May this year.
The Talleys-owned company pays its farmer suppliers in full four times annually. For milk supplied in December last and January, suppliers received $10.06/kgMS in March.
Open Country chief executive Steve Koekemoer says farmers will be paid at the end of August.
“This was another solid result and good to see the final number within our forecast range when considering the softening of pricing over recent month,” he says.
“We have taken the opportunity to adjust our outlook for the current season: the forecast remains strong as overall fundamentals still support a strong milk price.”
He flags that there is some caution around consumer spend due to the geopolitical impacts being faced around the globe.
Whether it translates into reduced dairy uptake remains to be seen.
“If so then we expect this to be more detrimental on higher value products as opposed to our strong ingredients product streams.
“There is no doubt that many people are facing tough times but a good source of nutrition such as dairy is an essential part of most people’s diet.
“Overall the global supply remains tight and although we may see some further softening in the short term, our expectation is that pricing will recover going forward,” he says.
The heat wave in the EU is hampering production and those relying purely on pasture to feed cows are finding it extremely difficult.
Turning to feed supplements is costly and the expectation is that EU production will struggle over the season.
Koekemoer expects this season will see a lot more movement in product mix to extract value.
“That is certainly playing out. We will optimise our flexibility as much as possible this season to ensure we are very competitive.
“Our factories are now all back online and milk is ramping up.
“Other than the normal minor teething issues at the start of the season, everything is back up and running.”
He says Open Country’s engineering and operational staff have once again done an outstanding job over winter to prepare for another busy season.
The company is commissioning new cheese plant equipment at Waharoa.
Koekemoer says Open Country cheese is in hot demand and it seems the new plant will be ready as planned to take advantage of the additional capacity.
Open Country operates four milk plants: in Awarua, Wanganui, Horotiu and Waharoa.
Its product mix includes milk powder, cheese, milk protein and organic products.
