Dairy farmers will receive a promised minimum payout of $4.50 a kilogram of milksolids by Oceania Dairy to supply milk to its South Canterbury processing site that betters the latest Fonterra forecast.
The $4.50/kg payout by the Chinese-owned company compares with Fonterra’s $3.85/kg forecasted milk payment, excluding its dividend.
Oceania Dairy, owned by Yili, has guaranteed minimum milk payout for the 2015/16 season.
The company said in a statement that it sought to support its local supply farmers and communities with the guarantee as the New Zealand dairy sector “reels” from continued turbulence in global dairy markets.
Oceania Dairy general manager Roger Usmar said the company wanted to send an important signal of support and partnership to its supply farmers at a time when Fonterra had reduced its forecast payout for the season to $3.85/kg.
“Backed by our owner, Yili, Oceania Dairy has looked at how we can practically support our suppliers at a difficult time for the sector. By providing a premium minimum guarantee, we can offer our supply farmers some certainty to their cash flow and operational planning for the 2015-16 season.
Yili recently released details of a further five-year, $400 million development project on the Glenavy site.
The project will add processing capacity to produce a wide range of additional products from the Glenavy factory.
This will include a whole milk powder dryer, an infant formula canning line and facilities to manufacture UHT milk products and lactoferrin.
Usmar said the company appreciated the importance of retaining and growing its supplier base during a planning phase of strong expansion.
Oceania dairy is one of South Canterbury’s largest employers with a roll of more than 70 staff.
All of Oceania’s products are exported to Yili in China where they are used as ingredients for a range of finished products, including infant formula, consumer milk powders, ice cream, yoghurt and liquid milk powders.
Yili was established in the Inner Mongolia province of China in 1956 and is the largest dairy company in China and Asia, and the 10th largest dairy company in the world.