Payout Reduced Due To Volatility Of New Zealand Dollar

MEDIA RELEASE – FRIDAY 6 JULY 2012

Payout Reduced Due To Volatility Of New Zealand Dollar

While current seasonal payouts for dairy products are trending down, long term the industry remains positive says Westland Dairy Products Chairman Matt O’Regan.

The West Coast-based company – the biggest dairy cooperative in New Zealand next to Fonterra – today reduced its forecast milk solids payout by twenty cents per kilo of milk solids (kgMS) to a range of $6.00 to $6.20.

O’Regan says all farmers know that dairying is not a short-term business and resilience is part of an industry that is exposed to weather, international market prices and a volatile New Zealand dollar.

“Fluctuations in payouts are normal and certainly not unique to Westland or this season. This is caused by economic factors that affect the whole industry.”

Those factors, O’Regan says, are seasonal volatility in the value of the New Zealand dollar and in product prices.

“The volatility of the New Zealand dollar remains high and the spot (exchange) rate strengthened recently, which results in fewer New Zealand dollars available for pay-out.”

O’Regan says Westland Milk Products has managed to soften these impacts through hedging activities that benefited total pay-out this season by NZ$5 million.

“The reduced payout will have an impact on the entire community with farmers bearing the brunt, but overall, dairying is still a great industry to be in and our co-operative is in good shape. Production is up, and demand in relatively new markets like China and South East Asia is robust.

The opportunity for new markets for specialised nutritional products continues to grow and is a very positive direction that Westland is taking advantage of, to the ultimate benefit of the shareholders.”

ENDS

© Scoop Media