Synlait CEO Resignation Highlights Deeper Challenges Facing Dairy Processor
A revolving door of chief executives at milk processor Synlait is a warning sign, says Lincon University senior lecturer in agribusiness Nic Lees.
He says the season has started well for the coast with the milk peak now passed and on farm milk production looking very good. He says so far this season the company is up 100,000 litres of milk on the same time last year which is positive for the dairy farmers in the region.
"This is due to good growing conditions and means that farmers are putting plenty of milk in the vat, which is great. We have had some challenging times and it's good to see the weather playing its part," he told Dairy News.
Wyeth says this news is good and comes at a time when farmers are facing huge inflationary pressure down on the farm with high interest rates and the cost of debt servicing. He says it's also good to see the milk price lift in recent Global Dairy Trade (GDT) auctions, although prices dropped slightly in last week's auction.
One advantage that generally farmers on the West Coast have, according to Wyeth is that they have a slightly lower cost of production compared with those farmers in some other parts of the country.
"I think if we can get the milk price a little bit higher by the end of the year they will fare reasonably well.
"Remembering right now we are dealing with projections of what might happen in about a years' time, and a lot can change between now and the latter part of next year," he says.
The West Coast of NZ is unique in that it is long and narrow and the climate ranges from very wet in the south near Fox to dry in the north around Karamea. Wyeth says irrigation is already being used in parts of the region.
He says the word is that El Nino tends to treat the region reasonably well; it's just a matter of waiting and seeing, hoping that the coast gets sufficient rain at the back end of the season.
According to Wyeth, dairy farmers on the West Coast are like other farmers around the country just wanting certainty - especially around regulations.
He says they are looking for some commonsense policies around farming that allow them to be clear on what they need to do and how they can move forward.
"That is the biggest frustration that I see with farmers. It is that ambiguity they face around any regulatory change," he says.
New Plant
Richard Wyeth says 2023 has been a challenging year - especially for some of the protein powders such as casein, but he says they are hoping to see an improvement in prices over time.
He says butter pries have been stronger in their main export markets of the US and Australia as well as NZ. He says they have also had good sales of UHT cream to China.
"We have been able to sell all our product, it's just that some of the prices have been subdued. Obviously China has been the main swing and their recent Golden Week Holiday, which is a time when people have a week off to reunite with families and take trips, was quite positive from a sales perspective. So, that sent some good signals and we are hoping that will continue," he says.
On the home front, work has begun on building a new $70 million lactaferin plant at their Hokitika site. Lactaferin is a high value protein derived from milk and is used as a specialty ingredient in infant formula. It is known to have a variety of benefits to adults as well - especially regarding intestinal health. Wyeth says the project is on time and on budget and should be up and running about the middle of next year.
