Whatever Fonterra Can Do, Westland Can Do Too

Published: Thu 30 May 2013 04:34 PM
Whatever Fonterra Can Do, Westland Can Do Too
Federated Farmers West Coast is delighted that Westland Milk Products is going toe-to-toe with its larger cooperative sibling, Fonterra, with a bullish forecast for the 2013/14 season.
“The news from Westland is just what the doctor, or should I say, accountant ordered,” says Richard Reynolds, Federated Farmers West Coast Dairy chairperson.
“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).
“Yet Coasters are also saying whatever Fonterra can do, Westland can do too.  You don’t need to be in Auckland to be an innovative international exporter of quality dairy products.
“While I don’t understand the underpinnings of Fonterra’s forecast, I much prefer a range like Westland Milk Products provides.  Its forecast for the 2013/14 season, between $6.60 to $7 per kilogram of milksolids (kg/MS), provides a buffer for the unexpected.
“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.
“While people look at the headline milk payout they forget that it is pure revenue and farmers have a lot of outgoings to pay before we hit profit.  The 2012/13 season was not one to write home about so the prospect of a decent season and a decent payout is exciting.
“These positives beside, farmers will be justifiably cautious given past experience when Westland initiated a claw-back. Federated Farmers advice is to welcome the forecast but run your farm finances conservatively.
“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,” Mr Reynolds concluded.

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