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New Zealand Dairies Announce Price Increases

03 October 2013

NEW ZEALAND – Dairy farmers have been receiving news of higher average milk prices from Synlait and Westland as processors compete with Fonterra.

The country’s second largest dairy cooperative, Westland Milk Products, has managed to beat Fonterra with a $6.34 kg/MS payout before retentions.

Synlait informed its supplier shareholders of a total average milk price of $5.89 kg/MS, this is nine cents above Fonterra’s farmgate forecast.

This follows Fonterra’s forecast farmgate milk price for the 2013/14 season of $8.30 kg/MS. After including a dividend of 32 cents per share, the total payout forecast adds up to $8.62.

Fonterra Chief Executive, Theo Spierings said that ‘robust’ prices have been driven by interest from China and that he expects growth.

“The higher cost of goods will make it more difficult to drive earnings growth in our consumer and foodservice businesses in the first half of this financial year,” said Mr Spierings.

“We also expect to see a negative impact on our product mix returns during the first half of the current year as milk powder prices significantly outpace the relative prices of cheese and casein.”

Rod Quin, Chief Executive at Westland Milk Products, said that Westland’s price is seven per cent higher than the initial opening budget.

He described the prices as a ‘good result’ given the tough farming and trading conditions that has beset the county’s farmers and possible because of the decision to move into value-added nutritional products.

“The results confirm Westland’s strategic decision to move from being a manufacturer of quality ingredients, to that of being a supplier of value-added nutritional products, which return higher prices for the company and better results for shareholders,” said Mr Quin.

“Our financial position at the end of the 2012-13 season means we are well placed to continue this strategy; the new nutritionals plant will be operating to full capacity in the 2013-14 season and we are investigating options for further development.”



TheCattleSite News Desk

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