Westland expects to top Fonterra's dairy payout

Stand-alone dairy company Westland Milk Products says it is feeling optimistic and ready to "cherry pick" markets, potentially outperforming its giant rival, Fonterra, next season.

The Hokitika firm predicts its payout for the next season will be between $4.05 and $4.15 - ahead of Fonterra, which has indicated it could be paying around $4. Chairman Ross Scarlett said a lot of work had gone into making Westland both independent and profitable.

"It's been a huge effort," he said. "We have a turnover of over $200 million ... we are very optimistic about our future.

"I've never had any doubts that we made the right decision to go on our own."

There were excellent commercial opportunities for the company and a large part of its business plan involved pursuing the added-value market.

In terms of economies of scale, Westland would be unlikely to be able to compete with Fonterra, but by looking to added-value products it could "cherry pick" markets.

"We don't want to be in low-paying commodity countries," Scarlett said. "We have a commodity component to our company - there always will be - but we want to be able to sell our product to the highest end of the scale.

"We can afford to do that, we're not a large company compared to Fonterra." Scarlett said Westland's forecast payout was "quite healthy", but much would depend on the exchange rate.

Market prices were looking healthy and this was not predicted to change in the immediate future.

Scarlett, a West Coast regional council member, took up the position of chairman in October, after Ian Robb decided it was time to step down.

- NZPA