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Westland maintains 2017 forecast payout

NZN 27/09/2016 Sophie Boot

Hokitika-based dairy co-operative Westland Milk Products has cautiously affirmed its forecast payout for farmers for the current season, noting the recent recovery in global dairy market is still prone to volatility.

The milk processor kept its forecast cash payout range for the 2016/17 season of between $4.55 and $4.95 per kilogram of milksolids and an advance payout rate of $3.80 per kgMS from September to June. Last month it forecast an average operating surplus between $4.75 and $5.15 per kgMS for the season.

"The board recognises the market is moving but, given the analysis around potential pricing volatility, we remain cautious," chairman Matt O'Regan said.

"The advance rate pricing reflects our commitment to supporting our shareholders and good cashflow management by the co-operative."

Global milk prices have bounced back from the lows of last year as producers around the world scale back their output, and milk processors including Fonterra have been raising their forecast payouts as a result.

Mr O'Regan said a significant portion of Westland's sales need to come from value-added products sold to Asian middle class consumers for it to prosper.

Westland confirmed its 2016 payout to suppliers was $3.87 per kg/MS, below breakeven for most farmers.

Founded in 1937, Westland is the nation's second-largest dairy co-operative and its annual report shows it has 430 farmer suppliers and turnover of $639 million.

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