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.
Yili, Asia’s largest dairy producer and Westland Milk owner, told its farmer suppliers last week that their milk will be picked up by the company beyond the 10-year supply agreement originally approved by the High Court of New Zealand in 2019.
More importantly, Westland also committed to pay farmer suppliers a 10-cent premium above Fonterra’s farm gate milk price for the 2024-25 and 2025-26 seasons. This milk price deal extends and goes beyond the payment terms made under the original scheme of arrangement.
The 10-year supply commitment was made when Yili, purchased Westland in 2019 and Westland guaranteed to collect farmers’ milk for a period of 10 years after the date of acquisition at pricing at least equal to Fonterra’s farm gate milk price.
Westland resident director Zhiqiang Li says Yili was extremely proud to return the faith farmers had placed in the company when they voted for the sale of the former co-operative in August 2019.
“We were extremely humbled by the overwhelming trust farmers placed in us when they voted to accept Yili’s offer and now we are deeply honoured to be able to repay that good faith,’’ Li says.
“Westland as a business continues to go from strength to strength and this is because of the trust and respect we enjoy with our farmers as partners in this great enterprise.’’
Westland chief executive Richard Wyeth says the company wanted to give suppliers the confidence they need to continue to invest in their businesses by offering the strongest possible supply agreement.
“The professional way our farmers conduct their businesses has put us in a very strong position with our customers and we are now in a position to repay that.
“We hope this arrangement will give farmers the confidence they need to continue to invest in their businesses, continue to grow with us and continue to gain a return on their investments for many years to come.
“And, of course, we’re also very excited to be able to offer this news to the community just before Christmas. We’re very aware of the role we play in the community and we’re very grateful for Yili’s support helping us to invest in the West Coast and Canterbury communities,” says Wyeth.
