Westland ups its payout prediction for the coming season
New Zealand’s second biggest dairy co-operative Westland Milk Products has today released a budget for the 2016-17 dairy
season of $4.55 - $4.95 per kilo of milk solids (kgMS).
Payout for the current season will be in the range of $3.80 - $3.90 per kgMS.
Westland will also start its payout advance payments for the 2016/17 season at $3.80 per kgMS, payable 20 September
2016.
Chairman Matt O’Regan says, “This will provide much needed cash as early in the season as possible. Advance rates are
budgeted to be phased down then stepped up, an approach similar to previous seasons.”
O’Regan says the 2016/17 forecast while predicted to end with a better result than the 2015/16 season, still leaves
farmers with cash flows well below their cost of production. The Board and management will be looking for every
opportunity to get as much cash to farmers as possible.
Chief Executive Rod Quin says the key influencers on payout are international market prices, foreign exchange rates, the
contribution of Westland’s value-add strategy, milk flows and expenses.
“The contribution to payout of our strategic move into value-add products – infant nutrition, EasiYo, retail butter and
UHT milk and cream – is worth noting,” Quin says. “Collectively, their value over and above the earnings we can expect
from skim milk powder is budgeted at 48c per kgMS.”
Quin says while Westland’s pay out prediction is more optimistic than the current season, the market still faces a
number of challenges.
“Prices remain under pressure as European and US dairy stock piles are now a feature of the market. Early contracts in
our sales book are in line with budgeted prices, but market volatility with price movements, both up and down that can
be sudden, make forecasting difficult.
“Based on what we see in the market today, with a forward view of global stock levels, customer demand and milk flows,
we anticipate some minor increases for whole milk powder. However, we do expect pressure on skim milk and butter
prices.”
ENDS