2 Feb 2018

Milk producer cuts forecast price

8:46 am on 2 February 2018

Westland Milk Products has cut its forecast milk price back by more than 20 cents.

Westland Milk Products has revised its payout to between $5 and $5.40 per kg.

Westland Milk Products has revised its payout to between $5 and $5.40 per kg. Photo: PHOTO NZ

The co-operative is now expecting a price of between $6.20 and $6.50.

Fonterra's farmgate forecast milk price is currently $6.40 kg/ms, and Synlait is forecasting $6.50.

Westland chair Pete Morrison said the drop in milk price was in line with other milk companies.

"We're kind to all our stakeholders and we want to keep it as reliable and with as much integrity as possible ... so we thought best to indicate that now.

"We still believe that will be a competitive payout."

Mr Morrison said it reflects the state of the market world wide.

"It's also the dollar ... you know the dollar has gone up five cents in the last month.

"So we've got to show an honest indication of where we are currently."

New deal, new customers

Westland has also announced a deal with New Zealand's largest farmland investment fund, Southern Pastures.

This makes it the majority shareholder of Westland, and is expected to bring an extra four million kilograms of milk solids to Westland's collection each year.

Southern Pastures also has a big stake in dairy company Lewis Road Creamery, and Mr Morrison said this will help Westland to gain customers.

"Straight away they bring Lewis Road to the table ... they want to make that a global brand and they've got the horsepower of research and everything in behind that.

"We'll be able to supply into that which is fantastic."

The Southern Pastures deal also opens the door to new markets.

"The proposition is, if the business case stacks up, is of forming a joint venture with us to feed into Lewis Road and create a grass fed brand based around environmental, sustainability, animal welfare...

"Everything that New Zealand's been looking for or saying we should be doing for a long while - they want to be at the fore front of that, as Westland does."