Two Major NZ Dairy Deals Completed
Two major acquisitions in the New Zealand dairy sector were completed this week.
MyMilk enables farmers to supply the co-op company for up to five years without having to buy shares; normally Fonterra suppliers need one share for every kgMS supplied to the co-op.
MyMilk says a prominent Mid-Canterbury farmer has become its latest supplier.
Tom Mason is chief executive and major shareholder of Terracostosa Ltd, which owns three farms in the region. Terracostosa recently bought two more Central Canterbury properties, and has shifted the production from one of these to MyMilk.
Mason is quoted as saying MyMilk is “meets the needs of the dairy sector, giving farmers an additional option other than supplying their milk elsewhere.
“How and when to raise share capital is an important consideration. MyMilk gives farmers a fair milk price, plus all the benefits of being aligned to the co-op, without having to commit to buying shares from day one.”
Terracostosa milks 3000 cows on its Mid Canterbury farms. After recently buying two more adjoining farms, in Greenpark, Central Canterbury, milking an extra 700 cows, Mason says contracting to MyMilk to supply the milk from one of the Greenpark properties was a logical decision.
“On the heavier soils at Greenpark we want to milk smaller Jersey cows, and the payment system of the company the farm was supplying would not give us the best returns for that milk.”
Returns for MyMilk suppliers are tied to what Fonterra pays its own supplier-shareholders, within 15% below Fonterra’s price, without the need for farmers to buy shares in the co-operative. MyMilk supply is limited to five years, during which farmers have the option to become Fonterra shareholders and supply in the conventional way.
Says Mason, “We intend to eventually combine the MyMilk farm with the neighbouring farm, at which point we will share up to take the milk from both to Fonterra.”
MyMilk chief executive Richard Allen says that since the company started in December it is ahead of supply projections for 2015-16.
Canterbury, Otago and Southland farms that do not already supply Fonterra are able to apply for one-year MyMilk supply contracts, renewable for a maximum of five years.
