Outgoing Westland Milk boss warns of two more seasons of dairy pain

Wednesday 30th March 2016

Outgoing Westland Milk Products chief executive Rod Quin has warned low milk payouts are likely to continue for another two seasons as the Hokitika-based dairy cooperative lowered its predicted payout for the current season by 10 cents.

Shareholders are being told to expect to receive $3.90-$4.00 per kilo of milk solids, down from $4.00-$4.10/kgMS, a prediction only made a month ago.

Quin and Westland chair Matt O'Regan say their conclusions are based on a recent trip to Europe, where the expectation is that output will continue to expand and international markets will be more aggressively targeted.

"The effect of this is likely to be a longer time frame for the downturn in prices; expected for another two seasons," Quin said. "This will lead to relatively lower payouts and a resulting impact on New Zealand dairy farmers."

Quin warned that lifting sanctions on Russia, previously one of the world's largest dairy importers, would only have a limited impact and "even if Russian sanctions were lifted, there would be little increase in demand as consumers there have shifted to cheaper cheese alternatives while incomes, therefore spending power, for many Russians have been negatively impacted by the lower oil prices.” New Zealand First leader Winston Peters has been calling for the country to resume dairy exports to Russia in order to help dairy farmers.

New Zealand farmers would need to return to low-cost pasture-based farming in order to weather the changes to global supply, Quin said. Westland would continue to move away from bulk commodity items to target added-value, high-end products.

Quin has been running the Hokitika-based cooperative since April 2009 but announced in February that he would be standing down. He previously worked for Fonterra Cooperative Group and was recruited by Westland from a role as an account director in Switzerland. He is due to stay in post until his replacement is announced. Turnover in 2015 was $639 million.

(BusinessDesk)

BusinessDesk.co.nz

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