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Of Payout and Things

Greetings Readers

NZ Dairy Group has announced a slightly lower payout than Kiwi Coop announced last month. The three to seven cent differences, quite a significant sum for many farmers, may illustrate the diverging philosophical approach by the two companies suppliers to their futures in the industry.

In spite of a much greater debt per kg of milk solids Kiwi has still managed better performance at a different stage of its investment cycle when compared with NZDG. Kiwi have pushed forward strongly with investment in manufacturing scale and the application of newer, technologically efficient processes and products.

Significantly only a proportion of NZDG shareholders have participated in, the about to be floated distribution subsidiaries 4.2 cent profit distribution.

Could it be that NZDG is now overtly showing the symptoms of a sunset company?

Is the company reflecting an unsaid wish of aging suppliers to cash up and cease milk production?

Is the Waikato racing headlong into a semi urban land use of lifestyle blocks and specialist horticultural production?

If the megamerger had proceeded, would it have triggered a major exodus of Waikato suppliers who have just been hanging on for some capital distribution to assist their retirement from milk production?

It is amusing to read of insufficient supplies of low priced milk powder being available to weaner calf rearers trying to satisfy the demand for bull beef.There must be a opportunist benefit available to an enterprising milk producer to profitably offer delivery of fresh milk to rearers instead of waiting for powder to be collected and processed at considerable cost for immediate reuse by calves in August.

Good farming

The Editor

Contact: editor@farm.net.nz




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