December 20, 2013

Westland Milk Products has lifted its predicted pay-out to its supplier/shareholders by US$0.30 to US$7.90-US$8.30 per kilogramme of milk solids.

Chief Executive Rod Quin says the pay-out will be good news for the cooperative's shareholders on the West Coast of the South Island and in Canterbury. "Coming on top of a previous season where we experienced drought and floods, farmers will welcome this boost in their income."

Quin says the pay-out prediction has been made possible by a strong outlook for milk prices and continuing high demand for the cooperative's products, especially infant formula for China.

"Forecast pricing looks firm. But the New Zealand dollar is showing considerable volatility, which is why there is a US$0.40 range in the prediction. International demand is still being driven by China but is strong across all key markets. Milk powders are still returning better than protein powders but the gap is closing," Quin said.

Milk production in Westland, New Zealand's second biggest dairy cooperative and third largest dairy exporter, is up 16% on the season to date compared with last year, but in line with budget. This includes the new farms that have started to supply in Canterbury. Canterbury suppliers went from 14 in the 2012-13 season to 34 for this season and Canterbury milk is now 18% of total volume.

Westland invested in a new nutritionals plant that was commissioned at the beginning of 2013 and Quin says this is now paying dividends for the company.

"Infant formula demand remains very strong particularly in China despite recent events. The Chinese Government continues to push consolidation in their domestic supply base and new registrations are required for importers. But Westland is well positioned to work within these new rules and take advantage of the surging demand, thanks to our relatively high milk growth and the wider range of product options we have available as a result of our investments in recent years," Quin added.