The demise of Westland as a cooperative contains a lesson for all business, says Roz Henry, the new Cooperative Business NZ chief executive.
Westland, New Zealand’s second-biggest dairy co-operative, predicts its payout to shareholder suppliers will be in the range $6.75 to $7.20/kgMS for 2018-19.
The figure is in line with payout predictions of $7.00 from Fonterra and Synlait.
WMP chairman Pete Morrison says the shareholders will welcome the prediction; they are anticipating a payout in the range of $6.10 to $6.30 for 2017-18.
“This (17/18 payout) is a disappointing result – as it is not as competitive as we had originally told shareholders we would be,” Morrison said, “but a number of one-off factors contributed to this.”
They included the impact of former-tropical cyclone Fehi, estimated to have cost at least 10c/kgMS. Lyttelton Port strikes added to the cyclone’s disruption and meant Westland incurred higher freight costs. And quality issues, while now improved, were more extensive than at first thought and took longer than expected to resolve.
“We are now seeing improved sales and a better sales outlook; there is a much improved performance by our infant and toddler nutrition (ITN) and UHT plants; and consumer butter has been, and we believe will continue to be, a star performer.”
Westland’s decision to enter the NZ retail consumer butter market with its Westgold brand has also paid off, Morrison said.
He expects butter to continue to be a good export earner.
“We see robust demand for butter in all sectors growing further in the coming year, with grass-fed growth showing even further potential. Westland is in a great position to take advantage of the growing demand for grass-fed dairy products.”
To make butter, Westland had to find markets for its skim milk powder and that is also looking promising, he said.