Grass-fed milk at the heart of Westland-Southern Pastures JV

A growing global demand for free-range, grass-fed milk lies at the heart of an agreement today that will see Southern Pastures LP – New Zealand’s largest dairy farmland fund – become a shareholder of Westland Milk Products – New Zealand’s second largest dairy co-operative.

The agreement, commencing from the 2018-19 season, will add an extra four million kilograms of milk solids to Westland’s milk collection annually, from Southern Pastures’ nine Canterbury dairy farms.

“Westland and Southern Pastures will also conduct a business case investigation with the intention of forming a 50:50 joint venture company,” Westland Chair Pete Morrison said. “The objective will be to process and distribute milk product that will be from free-range, grass-fed cows on farms that meet very high values covering animal welfare, human health, sustainability, the environment and human rights.

“The opportunity to supply free-range, grass-fed milk will not be restricted to the Southern Pastures farms. Any Westland shareholder who can meet the standards required will also be able to supply and take advantage of additional income that results.”

Morrison said that Southern Pastures is an adventurous, innovative and progressive company that shares Westland’s company purpose to provide nourishment made beautifully for generations – producing premium quality, high value, differentiated milk products that can command a premium in the global dairy market while meeting modern expectations around ethical and environmentally sustainable production.

Key to the agreement was Westland’s ability to segregate and process milk from different sources.

“That is one of the advantages of the size of our plant,” Morrison said. “We can economically and efficiently produce separate specialty lines with very little impact in terms of cost and time management on how the plant is normally run.”

The agreement will also produce an immediate benefit for Westland as Southern Pastures will bring with it premium New Zealand dairy company Lewis Road Creamery. This effectively creates a significant new customer for the West-Coast based co-operative with Lewis Road purchasing some of the grass-fed milk produced.

Payout review

Morrison said Westland’s Board also reviewed the company’s payout prediction yesterday reducing it to a range of $6.20 - $6.50 per kgMS (previously $6.40 to $6.80), reflecting market conditions, but still competitive compared with other payout predictions in New Zealand.

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