Payout trimmed as prices tumble
A record milk payout for this season remains on the cards - but breaking the $10/kgMS ceiling will be a stretch.
Open Country Dairy chief executive Steve Koekemoer has told suppliers that milk supply around the world remains tight.
While there will be some price volatility due to global issues, Koekemoer says the milk price will remain elevated for a while yet.
"With the supply/demand remaining in balance and input costs rising significantly for all farmers and processors, I expect an elevated milk price will need to be maintained for some time," he says.
He notes that supply from the various export regions typically focuses on a different product mix to NZ, which may challenge Open Country facilities to continually switch products.
"We have planned for this and will maximise our flexibility to drive best returns at the farm gate.
"There is no doubt that we will be very competitive at the farm gate as always."
Most of Open Country Dairy's factories are now shut with winter maintenance programmes underway.
Koekemoer says this is an ideal time for project teams to ensure interface work is carried out for factory upgrades prior to August milk ramping up.
"Engineers will be carrying out a multitude of tasks in the next 6-8 weeks to ensure our factories will roar into action when the milk starts flowing."
He also gave an update on major projects underway at its processing plants.
"Our wood pellet boiler conversion at Waharoa has gone extremely well and initial trials for replacing coal at that site have exceeded expectations.
"Although the official switch from coal to wood pellets was planned for 2023, we will accelerate the switch and start replacing coal progressively in the coming months.
"This is an outstanding result from the project and site teams."
Open Country has progressively worked to remove coal as an energy source for a number of years and after the Waharoa conversion it will only have two remaining coal-fired boilers in the business.
Koekemoer says these are located in Southland and plans are already well developed to convert those boilrs or alternatively install electrode boilers.
He says, as shared at recent farmer meetings, all site projects will be operational this calendar year as planned.
"There are some slight delays due to supply chain disruptions but no impact on the outcome.
"In summary, the business is in a good place and we are managing all areas in our control well."
