Hefty milk payout a ‘relief’

By Laura Mills

Westland Milk Products looks set to make its biggest payout yet, bringing some much-needed good news to the battered West Coast economy.
After a two-day board meeting, the Hokitika dairy co-operative yesterday lifted its 2013-14 forecast to $7.60 to $8 a kilo of milksolids before retentions — $1 more than the company’s first forecast in May. The advance rate has also increased to $5, payable on September 20.
Westland Milk attributed the lift to the strong start to the season and continued high international milk prices.
Cuffs Chartered Accountants principal Peter Cuff, of Hokitika, said that with the summer drought affecting the feed costs for many farmers, a good year would be a welcome relief and enable them to get financially on top of things again.
“We should see some flow through from the higher payout to the businesses whose functions support dairy farming. This will then flow on through to the community. Overall, it will be good for the West Coast.”
Mr Cuff has been urging farmers to put aside some of the high payout to create a buffer against debt in a lower payout year, “as history has shown the payout has fluctuated wildly between seasons”.
In 2008, for example, it was $7.99 and the next year just $4.58.
Westland Milk chief executive Rod Quin said in a statement the new season had started strongly, with milk flows up 5% on budget.
“Current market conditions, plus Westland’s strategic move to the higher value nutritionals market is driving this confident payout forecast,” he said.
“We’ve had a very successful launch of our new Westpro Nutrition products in China recently, and fully expect the new nutritional products plant in Hokitika to be working to capacity this season. All this is very good news for our shareholders and the local economies.”
In 2011-12, the co-operative paid out $6.14. The final payout for the season just concluded will be confirmed next month, but the last indication was $6 to $6.30 a kilo.