Westland Milk turnaround begins. Fonterra board elections get interesting. Canterbury sheep milk industry gets started

Westland Milk turnaround begins. Fonterra board elections get interesting. Canterbury sheep milk industry gets started

By Guy Trafford

The Westland Milk Products co-operative has announced its end of financial year results. For supplier shareholders the results are likely to be greeted with mixed emotions.

A $3.3 mln profit has been achieved but it comes on the back of 5 cents per kgMS retention of the final pay-out. Set at $6.12 after the retention suppliers receive $6.07 per MS. While this is the lowest pay-out of the milk companies it is still an 89 cent turn around from last year and makes Westland the biggest improver of the milk companies, which may provide a little comfort to suppliers.

Milk volumes processed are down -2.9% but the Joint Venture announced back in January with Southern Pasture did not come into place until the current 2018-19 season and so the seasonal vagaries affected WMP as it did other processors. The forecasted pay-out for the current season has been revised to $6.50 -$6.90 down on earlier projections due to the drop in international butter prices. If WMP can achieve this they will have, finally, brought themselves into line with other milk processors, assuming they achieve their targets. The review of their financial structures continues with shareholders due to be updated the AGM on the 5th of December.

Some interesting approaches are being used in the EU to encourage farmers to adopt more sustainable practices. The latest is of banks, notably Rabobank the Dutch based co-op, offering lower interest rate to farmers who move into a more sustainable space.

Back to local politics, Leonie Guiney appears to be a tiger for punishment and has thrown her hat into the ring to be elected onto the Fonterra board again. Ms Guiney was elected to Fonterra's board in 2014 but failed to get re-elected last year. A strong critic of some of the Fonterra investment decisions particularly around the Beingmate investment, she was subsequently involved in a legal battle with the company, supposedly around leaking boardroom information, which was settled out of court about six weeks ago.

Given this background if indeed she can get back on the board there would be a strong advocate for more transparency coming out of the co-op. Bringing up the fifth name to go in the hat along with the previously announced board nominated persons is John Nicholls, the director/owner of Rylib Group, a Canterbury company with six farms. There are only three vacancies for board positions.

On another dairy note with a subtle difference and good turn-out is expected at a public meeting being held in Canterbury tonight (Thursday) to formalise the establishment of a Canterbury based sheep dairy organisation. Judging by interest shown from a wide range of parties including financiers, processors as well as farmers a positive outcome is foreseen. Given the lack of milking sheep on the ground there will be a time lag before we see milk being processed for export in Canterbury, which is the ultimate goal, but this meeting should be a good and necessary step.

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Leonie Guiney was not recommended to the Board by the Independent Selection Panel, and therefore did not stand for re-election. That is not to say that had she stood, the farmers would not have elected her.

Given that Nicola Shadbolt is not standing this year (what REALLY is behind that is a question on many shareholders minds) that is two out of three women no longer on the Board. Will be interesting to see what avenue the remaining woman, Donna Smit, chooses to go through next year. - The ISP process or the farmer nominated one.

If the three board endorsed nominees all get in that will be a a vote for the status quo and the dominance of Fonterra spin.
Can't see any good from that.

Tatua payout $8.10 plus 52c retentions. This is who Synlait should be compared to. So if Tatua can achieve this why does Synlait pay it's shareholders so much less?
Listen around at 2.20m https://www.nzherald.co.nz/the-country/listen/news/article.cfm?c_id=600&...