The sale of Miraka was a direct result of its financial instability, which had been a topic of industry speculation for some time. The company’s three largest shareholders, including Vietnam’s Vinamilk, were reportedly unwilling to invest any further capital. This lack of financial support, compounded by a 13% drop in Miraka’s levy payments to DairyNZ between 2020/21 and 2023/24—a clear indicator of declining processed milk solids—left the processor vulnerable and led to its rapid sale to OCD.

A key factor in this market dynamic is Fonterra’s updated strategy, which aims to “deliver the strongest farmer offering” by maximizing milk prices and providing strong returns. Despite its market share of milk slipping from 95% in 2001 to 77.7% in the most recent season, Fonterra’s scale, efficiency, and balance sheet power create a formidable challenge for smaller dairy processing companies. According to one senior analyst, this model provides farmers with a stable pathway to sustainable dividends, which is a powerful incentive.

However, the article notes that farmers do have other options, as smaller, more nimble processors can offer different advantages. Miraka’s former suppliers appear to be content with the sale to OCD, which will now be the second-largest processor in the country by a considerable margin. With the addition of Miraka and Mataura Valley Milk, OCD will operate six processing sites and collect “well north of 10% of the country’s milk,” proving that scale remains a crucial element in today’s dairy supply chain.