Milk price certainty
Westland Milk has reaffirmed its commitment to pay farmer suppliers 10c above Fonterra farm gate milk price for the following two seasons.
Toni Brendish says a strategy adopted by WMP, including the phrase ‘nourishment made beautiful for generations’, deliberately doesn’t limit the organisation to producing only dairy products. For example, products from plant protein or other animal protein could be processed by the existing WMP factories.
Two years ago the co-op was in trouble; now it has turned a corner financially by driving down costs, managing inventory better and building a leaner business.
Brendish says high value products such as infant formula and nutritional products are starting to deliver for the co-op. And it is leveraging Westland’s heritage and location and intends to use this to differentiate its products from other milk processors’.
She points to the heritage of tenacity of WMP shareholders and the unique environment of the West Coast with its good environmental footprint. And there’s WMP’s reputation as a butter producer.
Brendish expects the butter price to come down, but not as fast as it went up. She is cautious about the overall dairy market and its possible effect on Westland’s payout.
“The payout will reflect the trends internationally. We have seen several GTDs soften; this and the combination of events in Europe mean we will see general softening in prices,” she told Rural News.
“Westland hasn’t seen milk supply growth so I would say the payout is at the lower end of the forecast range – $6.40 to $6.80. We are still within the range and I’m feeling confident of that, but I have said to the shareholders that it will be at the lower end and we need to be cautious.”
Brendish says the impact of Brexit, Donald Trump and other geopolitics on the world dairy market and how repercussions may affect New Zealand and WMP are a concern.
“At Westland we spend a lot of time ensuring we are not overexposed in any one country.
“For example, 15% to 18% of our business [is with China] but we measure that carefully; we don’t want more than 25% going there, despite the growth of infant formula; we ensure we are not overexposed in that market.”
Brendish says they have good trade with the Middle East, US, North Asia and some African markets. She believes this will protect WMP if there is fallout from Brexit or some other international event.
