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.
It already has three plants – in Waharoa, Southland and Wanganui. The company is majority-owned by Talley’s Group, which also owns Affco Meat, headquartered in Horotiu.
OCD suppliers were informed of the expansion programme during a round of supplier meetings last month; the board has given its green light.
In the monthly newsletter to farmer suppliers, OCD chief executive Steve Koekemoer told suppliers that groundwork on site will start shortly.
“This expansion will provide more capacity for us in the Waikato and more options for the milk we process,” he says.
The new plant is expected to provide OCD more flexibility on its product mix.
Primarily a cheese producer, OCD also makes whole milk powder, whey protein concentrate and anhydrous milk fat for export.
Koekemoer told suppliers that while cheese has been its priority product, there are signs that the EU is getting more aggressive on cheese prices.
“We are also aware of the USA cheese stocks building which may put some pressure on prices over the following months,” he says.
“We stand behind the superior quality of our award winning cheese and drive the premiums wherever possible.”
Pricing for fat products such as AMF have continued at record levels, but to make these products OCD needs to produce skim milk powder (SMP).
On Global Dairy Trade, SMP is currently trading at a US$1,000/tonne discount to WMP, which negates the high AMF pricing.
Also, there is still over 350,000 tonnes of skim milk powder in the EU intervention stock from the previous season and the first 472 tonnes of new stock has just been added for this coming season.
Koekemoer says this indicates that there will be no short-term recovery for SMP and that the differential for WMP and fat prices will remain for a while.
“Open Country Dairy’s future will rely on the ability to have more flexibility on product mix; to remain competitive and move with the market.”
Talley’s own 75% of OCD; Singapore-based Olam International owns 15.19% and Dairy Investment Fund Ltd is the third largest shareholder with 6.7%.
