International factors drive Westland Milk to cut predicted payout range

Westland Milk.

Westland Milk Products cut its predicted payout range from $6.50-$6.90 to $6.10-$6.50 this week on the back of the decline in global prices for dairy commodities.

In a statement, chairman Pete Morrison said the factors driving the revision were largely out of Westland's control, involving international market forces and an increasing abundance of milk supply globally.

Indications were the co-operative would come in about the middle of that range.

While it would not be news shareholders wanted to hear, it was better they were prepared now and budgeted accordingly, he said.

Some internal factors were also influencing the payout. Ironically, there had been a very good start to the season. However, the build-up to peak milk period was higher than predicted and lasting longer.

"While this might appear to be a positive for the co-operative, the reality is that during peak our processing capacity means we have to produce mostly low-value bulk commodity powders in order to ensure we can get the milk through,'' Mr Morrison said.

"That means we have to make less high-value product, such as infant and toddler nutrition, which give us the best returns.''

Westland was making progress on the matters under its direct control. It had the right business strategy with its shift in focus to specialist products produced from milk segregated by qualities such as A2, grass-fed and environmentally sustainable, he said.

Demand for its Ten Star Premium Standard (10SPS) milk was high and would give good returns.

There was "enormous'' interest from international markets and predicted demand outstripped forecasted supply.

More shareholders were needed to convert to that standard as soon as possible.

10SPS Milk was a standard developed in partnership with Westland Shareholder Southern Pastures. It was based on grass-fed milk produced on farms complying with high environmental, animal welfare and human resource standards.

Up to 1000 people are expected to attend New Zealand and Ireland's first joint Pasture Summit in New Zealand

It will consist of conferences in Hamilton on November 26 and 27 and Ashburton on November 29 and 30.

Chairman Colin Armer said there would be international and local speakers, cutting-edge science and robust debate.

Fonterra will hold its annual meeting next Thursday at its Lichfield site in South Waikato.