Synlait has launched a drive to increase the numbers of its milk-supplying farms, with an emphasis on the wide catchment area for its Pokeno plant in the North Island.
Newly appointed director for on-farm excellence and business sustainability Charles Fergusson is keen to recruit A1 protein-free milk supply in Waikato, Coromandel and Hauraki Plains.
“We can make a compelling offer consisting of a competitive base price, up to 20c premium for participation in Lead with Pride and a further 20c for A1 protein-free milk,” he said.
Synlait uses the term A1 protein-free to distinguish from the A2 Milk Company, a shareholder and customer.
“We are very keen to grow our milk supply to Pokeno, which is a state-of-the-art dairy processing plant capable of different options.
“There are herds already producing A1 protein-free milk without getting a premium and there are farmers who can quite quickly convert if they have an incentive.
“That transition has been happening naturally for some time and there are ways to accelerate it.”
Fergusson was appointed to the Synlait leadership team during February after 12 years with Fonterra, the second half as northern South Island regional head of Farm Source.
Against the background of a declining milk supply for New Zealand as a whole and more stainless steel being built, competition for the supply of farmers to their processors is getting hotter, he said.
Synlait Pokeno is regionally competing against Open Country’s Horotiu and Waharoa plants, seven Fonterra Waikato plants, Tatua at Tatuanui, Green Valley Organic at Mangatawhiri, and the new Happy Valley Nutrition plant at Otorohanga, which will begin processing next season.
Neighbour Yashili Pokeno may also be looking for farm supply.
In its 2022 annual report Synlait said there were 63 supply farms to Pokeno and 212 to the home-base Dunsandel plant in Canterbury, rising to 220 in the 2023 season.
Fergusson was not prepared to disclose how many sign-ups have been already received for the 2024 season, but a decision to leave Fonterra would have to be made by now.
Synlait has an advance payment schedule similar to that of Fonterra but Fergusson is keen to introduce flexibility, perhaps including variable payment times and percentages and hedging options.
“Anything we can to do accelerate cash to farmers will be critical in our review of the advance rates,” he said.
Pokeno plant has geared up for a non-dairy multinational for which production is under way and whose identity will be disclosed at the May 8 Investor Day on site.
Fergusson said that is evidence of Synlait’s willingness to be innovative and that A2 products beyond milk powder for infant formula are possible in future.
Synlait’s forecast milk price for the current season is $9/kg milksolids but that has a downside risk following Fonterra’s trim of 50c to a midpoint of $8.50.
