Buttery prize
OPINION: Westland Milk may have won the contract to supply butter to Costco NZ but Open Country Dairy is having the last laugh when it comes to cashing in on NZ grass-fed butter.
Open Country Dairy, which has recently commissioned a new cheese capacity upgrade and lactose plant at its Waharoa facility, needs more milk to fill it.
In a bid to lure suppliers from Fonterra, Open Country is also offering a new milk payment option, similar but superior to the co-op's, for new and existing Waikato suppliers.
It's new 'milk price plus' initiative guarantees farmers 5c/kgMS more than they would have earned on Fonterra's farmgate model and a better advance rate.
The payment system will be similar to what Fonterra offers - monthly advance rate paid to farmers plus a wash-up payment after the end of the season.
Open Country currently also has a high cash flow model that pays its suppliers in full over four installments in a season, which will also be on offer.
Open Country chief executive Steve Koekemoer says the company is putting two payment options before Waikato farmers because some farmers are used to working around traditional farmgate milk price model based on the markets.
"We currently pay our farmers quarterly in full which follows the market pricing and delivers cash back to the farmers quicker. We have always believed that farmers deserve to get their money back faster," he told Dairy News.
"Many farmers are used to operating under the traditional payment system used by other processors.
"So, we are offering both options as a limited time offer to Waikato farmers."
Waikato region is the most competitive region. Synlait, Open Country Dairy and Fonterra operate milk plants and will soon be joined by Olam which plans to commission its new plant at Tokoroa in August. Happy Valley Milk is building a milk plant at Otorohanga but the project has been delayed by a lack of funds.
