Fonterra poaches Westland farmers
Fonterra’s plans to tap into dissatisfaction over low Westland Milk Products payouts by approaching suppliers to switch loyalties may have hit a hurdle.
Westland is fighting back, posting its most competitive payout forecast for years of $6.75 to $7.20 per kilo of milk solids for the 2018-19 season, to match Fonterra’s $7kg/MS.
Federated Farmers West Coast president Peter Langford said Fonterra was approaching larger Westland suppliers to send their milk over the southern alps. ‘‘They’ve done it before. It’s not the first time.
‘‘None of us are happy that Fonterra are soliciting supply from the West Coast, but what can we do about it.’’
West Coast farmers closest to state highway routes to Fonterra’s Darfield plant in central Canterbury were being targeted. They included suppliers from Inchbonnie and Rotomanu in the south. Dairy farmers at the top end of the Grey Valley and Reefton were also being approached for supply via the Lewis Pass.
Westland was making an effort to lift its payout to more competitive levels, said Langford, a Karamea dairy farmer and Westland Milk shareholder. ‘‘We don’t want any suppliers leaving, as it will reduce milk volumes and sales potential.’’
Suppliers at Karamea and south of Hokitika were too geographically remote for Fonterra, but if those in more central districts switched this could leave a potential ‘‘hole in the business’’.
‘‘We understand the ramifications of Fonterra picking the eyes out of our business.’’
Westland Milk Products chairman Peter Morrison, said its payout range of $6.10 to $6.30kg/ MS for 2017-18 was a disappointing result. ‘‘It is not as competitive as we had originally told shareholders we would be, but there were a number of oneoff factors contributing to this.’’ This compares with Fonterra’s predicted farmgate price of
$6.75kg.
In the 2016-17 season, Westland’s payout to farmers was
$5.18/kg. In a move in the other direction, a dairy farm fund Southern Pastures announced earlier this year that it would switch the supply of its nine Canterbury dairy farms from Fonterra to Westland.