Westland Looks to Match Fonterra Bullishness31 May 2013
NEW ZEALAND - Westland Milk Products has announced it is going to mimic Fonterra and increase farmgate payments for the 2013/14 season, to the delight of producers.
Farmers have been notified of a forecast price of NZ$6 and $6.30 per kilogram of milk solids. This, Richard Reynolds, Federated Farmers West Coast Dairy Chairperson, says forms a much more secure range that Fonterra's structure.
“While I don’t understand the underpinnings of Fonterra’s forecast, I much prefer a range like Westland Milk Products provides," says Mr Reynolds. “First up we’ve got reconfirmation of this (2012/13) season’s payout before retentions of between $6 and $6.30 per kilogram of milksolids (kg/MS).
"Westland's forecast for the 2013/14 season, between $6.60 to $7 per kilogram of milksolids (kg/MS), provides a buffer for the unexpected," adds Mr Reynolds.
“Westland’s 2013/14 forecast must be fairly solid because on 20 September, supplier shareholders like me will be looking forward to an opening advance of $4.80 kg/MS for milk collected since 1 August.
“Right now we are having an amazing end to autumn on the Coast. While the drought may be over we may also be low on supplements. The combination of drought and payout means some farmers will be staring at a cash loss for 2012/13."
Do not forget that farmgate prices show purely revenue only and many costs can effect business viability, warns Mr Reynolds.
Federated Farmers therefore advises that farms are run conservatively to manage any fluctuations seen within Westland.
“What we are also seeing is Westland is moving to end its down season.
“This means it will at last maximise its assets for our cooperative benefit. By looking to collect milk ‘off-season’ and noting a 2,000 litre minimum pick up, it means we can modify our farm system to bring in income where previously we couldn't.
“That’ll be good for all Coasters,” concludes Mr Reynolds.
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