Ex Cyclone Fehi which battered the West Coast at the start of February is starting to bite farmers in the pocket as their co-operative Westland Milk Products today reduced its forecast payout for the 2017-18 season.
Chairman Peter Morrison said the board meeting last week had considered its options in light of Fehi, namely the bottom line financial impact due to interruption in production.
“The costs to Westland were significant, equivalent to some 8-10c per kilo of milk solids on payout,” Mr Morrison said.
“As a result we were obliged to approve a new payout forecast range of $6.10 to $6.40.”
The previous payout range announced at the end of January was $6.20 to $6.50, while earlier it was expected to be higher still at $6.40 to $6.80.
Responding, Whataroa farmer Dave Nolan said shareholders had been expecting the forecast payout might be lowered.
About 40% of Westland’s supply area on the West Coast could not be picked up for days following Cyclone Fehi and the Hokitika dairy plant was down for about five days without electricity.
Mr Nolan said the latest payout prediction represented about a $20,000 drop in income for the average Westland farmer producing 200,000kg of milk solids a year.
That came on top of the ongoing financial impact of the storm, which “cut our grass in half” and was only just recovering.
“In the last fortnight I’ve lost $60,000 … It’s a bit disappointing,” Mr Nolan said.
Warmer weather now meant grass growth was picking up, but time was running out to recover with the season on the final stretch before winter. “Most people are in a feed deficiency,” Mr Nolan said.
“We are just concerned about the lack of milk which will lower our payout (overall).”
WMP chief executive Toni Brendish told the Greymouth Star following ex-Cyclone Fehi the event had underscored the logistical vulnerability Westland faced in maintaining production. The big issue was lack of continuous power supply for the Hokitika dairy plant, which had to shut down.
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