However, some in the Coast’s dairy fraternity believe otherwise.
Federated Farmers West Coast president Peter Langford said it is widely known Westland suppliers are talking to Fonterra as it appears to be making a foray into Westland Milk’s home patch.
It was a topic of discussion at the Federated Farmers West Coast annual meeting in Greymouth.
The meeting heard Westland suppliers from the Lake Brunner region in the south to Springs Junction in the north are being courted by Fonterra.
“The word is that Fonterra has lost volume at the top of the South Island for a number of reasons including dairy conversions to vineyards and hop growers.
“But Fonterra is picking the eyes where it suits, targeting specific suppliers for its West Coast business,” Langford said.
While he acknowledged a level of disgruntlement among Westland suppliers the past 18 months had seen a marked improvement.
“Westland needed to do a better job to assure shareholders it had a sustainable model into the future.”
Shareholders had, out of loyalty, given the new board and management breathing space to get a plan in place and the company had responded.
“The company has got potential to be really good, everything is in place now, they are upping their game, on the move and in the right direction but just have to bear the fruit.”
Langford said there is no panic for suppliers contemplating a switch to make a decision in haste, given Westland extended the period for cessation notices for this year from May 30 to December 31 for any shareholders choosing to cease supply effective from May 31, 2019.
While he expected some suppliers would switch he wasn’t aware of an imminent mass exodus.
Fonterra chief operating officer Miles Hurrell confirmed Fonterra is “having conversations” with a number of Westland suppliers.
“We have had inquiry from Westland Milk suppliers looking to consider options,” Hurrell said.
“If it falls under DIRA rules and regulations then we are absolutely open to having those conversations.
“The key point is if farmers are in a Fonterra catchment and wanting to explore options then from a DIRA regulation perspective we are obligated to respond.”
Hurrell said it is not “commercially appropriate” to disclose if any or how many farmers have or are contemplating a switch or on what grounds Fonterra was selling itself.
Westland Milk chairman Peter Morrison said the company is aware Fonterra has approached a number of shareholders in selected areas of the West Coast.
But he is confident Westland’s milk supply is secure.
“We respect the right for individual farmers to have such discussions given, at the time of the approaches, it was when supply choices were being considered.
“However, I believe that what Westland can offer its shareholders will clearly demonstrate that their best interests will be served by remaining with the co-operative that has served their region for more than 75 years,” Morrison said.
“There are strategic and budgetary plans that will allow us to deliver a good result for shareholders.”
They included Westland’s recent announcement of a predicted payout range for its shareholder suppliers of $6.75 to $7.20 for the 2018-19 season.
“This compares very favourably with other dairy companies.”
Morrison said there is great shareholder support for the governance and management of the company under its revised board structure and governance processes and new executive leadership team.
“We’re working together on plans that represent considerable opportunities for Westland.
“The board also moved the deadline for cessation notice and that’s a strong signal of confidence that we can deliver a good outcome for shareholders.
“It also took the pressure off shareholders by removing the need to make a decision before the end of May, giving everyone time to think things through and see how the new season is shaping up.”
Westland’s board has also begun a review of the co-operative’s capital structure.
This was a request of the board by shareholders at March district meetings.
“The board is strongly of the view that the best outcome for our shareholders will be delivered if they delay considering their future supply options until that review is completed and presented to them for discussion.”
Morrison said while there had been a small number of cessation notices come into effect on June 1 this year, the recruitment of Southern Pastures as a shareholder, supplying milk from its Canterbury farms, has Westland going into the 2018-19 season with a net increase in milk supply.
Because of the extension for cessation notices this year Morrison said he couldn’t speculate on the possibility of any shareholders choosing to cease supply in 2019.
