Hokitika-based Westland Milk Products is establishing a foothold in Canterbury, with plans to build a milk concentrate plant at Rolleston and poach milk suppliers from New Zealand dairy giant Fonterra.
Management revealed the plans to West Coast suppliers during its latest round of district meetings.
The Greymouth Star understands the plans include building a milk concentrator at the co-operative's new Rolleston storage facility by 2012. That will take the water out of Canterbury milk, with the dry product then railed to the Hokitika factory for further processing.
The next stage of the Rolleston plan is to construct a $100 million value-added product factory in 2013, after which the concentrator plant will be moved to the West Coast.
The plans, hatched by the board of directors, have not been universally welcomed by Westland's farmer-shareholders.
Chairman Matt O'Regan, of Inangahua Landing, yesterday declined to comment. Chief executive Rod Quin was on leave.
Sources say Westland Milk's entry share price for new farmers is close to $1.50 per kilogram of milk solids, much lower than Fonterra's entry price of about $4.60. That would entice some Canterbury dairy farmers who send their milk to either Fonterra or Synlait plants to shift their supply to Westland.
Westland Milk is aware Fonterra could encroach on the West Coast in retaliation, but the company intends going ahead regardless, saying the threat has always existed and the company has the option to not pay share money for five years, under dairy industry regulations.
One supplier said there were mixed responses from farmers at the district meetings. Some were unhappy, saying Canterbury farmers had the opportunity to switch companies and pocket about $3 a share because of Westland's lower share price. Others were in support, feeling the company would be in a better business position, and their ability to sell milk products on the world market would be stronger.
Westland Milk Products has about 390 suppliers from Fox Glacier to Karamea.
It moves 500,000 tonnes a year of Hokitika-made milk powder through the 17,000sq m Rolleston dry storage warehouse, which was officially opened last May.
Last month, Westland announced a final payout forecast range of $7.40 to $7.60 per kg of milk solids, and a monthly advance rate of $5.10.
The company has said it was unlikely it would beat its payout record of $8.29, before retentions, from 2008.
Fonterra announced last month a forecast payout rate of $7.90 to $8 before company retentions, a record for the dairy giant.
After the deregulation of the New Zealand dairy industry in 2001, nearly all of the dairy co-operatives amalgamated to create Fonterra. Westland Milk Products shareholders voted to remain an independent co-operative.
