Forget about following the floundering fortunes of Fonterra – a2 Milk is the NZX’s fast-rising star

New Zealand  eyes  have been so  focussed  this  week  on  an event  20,000kms distant   that they  might  not have  noticed here  at  home another  extraordinary  event, taking  place  on the  NZX.

The market capitalisation of a company  which listed   as recently  as  2012  on the local sharemarket soared  past the  $12bn  mark and is hard on the heels of  Meridian Energy,  which has the  highest   valuation  of  NZ-based companies on the NZX  at $12.3bn.

The  challenger is a2 Milk,  which sells a  specialised  type of  milk  with what  it claims are health benefits.

A2 has had  a  chequered  history  but  its  market  valuation  keeps  climbing,  racing  ahead   of  blue chips  like  Auckland International  Airport  and  Fisher  & Paykel  Healthcare  and  leaving  in its dust some one-time  market  darlings  like Fletcher  Buildings  (market cap  $4.3bn)  and   Spark  ($7.2bn). Continue reading “Forget about following the floundering fortunes of Fonterra – a2 Milk is the NZX’s fast-rising star”

Yili’s gain on the West Coast brings a $500,000 windfall to farmers – but local leaders lament sale to foreigners

Westland  Milk  Products  farmer-shareholders  voted overwhelming in the past week to accept  the  $558m  takeover bid   by   Chinese  giant  Yili  for the   co-op’s  milk processing  operation.

For  individual  farmer shareholders, the  bid  means an injection of  around  $500,000 each  into their  bank accounts,  plus better  returns for their milk  over  the  next  10 years.

No wonder  94%  of the  96% eligible shareholders  cast their votes in   favour.  West Coast farmer and Federated Farmer president Katie Milne, who is also a WMP director, said it was an “absolutely stunning” result for West Coast farmers.

Yet the  sale  is lamented  by  many local leaders, as well  as  by  NZ  First  whose spokesman  Mark Patterson  wailed about an  “alarming trend”. Continue reading “Yili’s gain on the West Coast brings a $500,000 windfall to farmers – but local leaders lament sale to foreigners”

NZ First is not alone in worrying at the implications of a Westland Milk sale to Yili

Is   Westland  Milk   one of  NZ’s  “key  strategic assets”?

NZ  First  is adamant  it is and believes the government  should be a  applying a  “national interest test”   to the proposed  sale of the company  to the Chinese  dairy giant Yili.

Those  who  see  heavily indebted  companies  like Westland Milk struggling to  make a profit and  not  even  matching  Fonterra’s payout  to its suppliers might take a  cooler view  to  the proposed  sale.

Federated Farmers dairy chairman Chris Lewis said he had received “mixed” feedback from West Coast farmers on the deal, which will require 75% approval. Continue reading “NZ First is not alone in worrying at the implications of a Westland Milk sale to Yili”

Culling our cows isn’t the only way to reduce emissions – but greenies shy from the GE option

Climate  change  warriors  who   are  demanding  NZ’s  dairy  herd   be culled  immediately to  meet  targets of  lower methane emissions  may be confounded by the evidence  that leading farmers  are  already succeeding  in  lowering gas emissions.  And the  prospects  of  huge  advances  in other  aspects  of  dairying,  particularly  in   AI, robotics  and  the development of  new crops,  portend further  gains..

And what’s holding  up another  key development?

It’s the intransigence of the so-called  Green lobby against the introduction of genetic technology.

In a Ministry for the Environment briefing to Environment Minister David Parker in June 2018, officials warned NZ could fall behind the rest of the world in genetic engineering technologies.  They said the rapid pace of technological change is forcing countries to clarify their positions, and recommended the government update the law. Continue reading “Culling our cows isn’t the only way to reduce emissions – but greenies shy from the GE option”

Fonterra and farm leaders gripe at O’Connor’s DIRA decision – Greenpeace is even more grouchy

Agriculture Minister Damien O’Connor didn’t win too many new friends  (and may have lost some) with his  decision  on the review of  the  Dairy Industry Restructuring  Act, the  2001  legislation  which set up  Fonterra  supposedly to   become  a  “ national  champion”.   

We  all know  how  that  has turned out.

So   what were the reactions to  O’Connor’s  latest  move to improve the  legislation  which initially had the  objective of  “promoting  the efficiency  of  NZ  dairy markets”?.

Fonterra  chairman  John Monaghan  said  the company was disappointed it still has to supply milk to large, export-focused businesses. Continue reading “Fonterra and farm leaders gripe at O’Connor’s DIRA decision – Greenpeace is even more grouchy”

Yili bid for Westland Milk raises questions about dairy co-operatives – and Fonterra’s ownership


On  the face  of  it, it’s  a  no-brainer.  Weighed  down  with  debt,  Westland  Milk,  based in   Hokitika  is financially  on  its  knees.  Riding  to  its  rescue,  Chinese  dairy  giant  Yili  has come in with a  $588m buyout deal   which  will yield  $3.41  a share   to the co-op’s  farmer shareholders,  and, as well,   absorb  Westland’s debt and liabilities.

According to  Westland, the  nominal value of its shares  has ranged  from  70c  to $1.50  per share. For the  average-sized  Westland farm, the  share offer translates to  about half a  million dollars cash.

The offer  looks even  more attractive since  Westland had to  cut its  milk payout  forecast, while other  companies’ forecasts  are rising.  Westland, which has  grown out of  the West  Coast’s  150-year  dairy heritage, hasn’t paid  a  competitive milk price   for  several years.

The conditional  deal comes with extra  sweeteners. Yili has committed to collect all  milk  supply. It  will  also pay  a  competitive  price of at  least  as  much as  the  Fonterra  farmgate milk price   for  10  years.

But why  would   Yili   go that distance? Continue reading “Yili bid for Westland Milk raises questions about dairy co-operatives – and Fonterra’s ownership”

Comforting news for dairy farmers as companies report results and the world price rises again

Encouraging signs emerged this week that key elements in the structure of NZ’s largest export industry are whipping themselves back into the shape they should be.

The giant  co-op  Fonterra  has  gone back  into the  black  with a net profit of $80 million in the  first half,  after previously recording  a  net  loss of  $186m.

Meanwhile Westland Milk Products, NZ’s second biggest dairy co-op, is in line to be  sold  to China’s biggest  dairy company,  Yili,  in  a $588m  transaction that would inject nearly half a million  dollars into the operations of  each  of its  suppliers.

Alongside these co-ops, the Canterbury-based Synlait has underlined its strength in the  industry with a  solid result in  its half-year after  achieving   higher sales  volumes.  It reported a half-year net profit of $37.3m,  9.6%  lower  than   the  $41.3m  in the previous first   half,  but  with the  focus  on investing for  growth,  with a  second processing  plant due  to come on stream for  the  2019-20 season. Continue reading “Comforting news for dairy farmers as companies report results and the world price rises again”