Small co-op continues to break its own records, year after year.
Tatua paid its farmers $10.50/kg milk solids for the 2023-2024 season after the small dairy co-operative earned $497 million in income, with earnings available for payout of $184m.
Its overall earnings equated to $12.20/kg of shareholder-supplied milk solids, before retentions for reinvestment. Tatua retained $1.70/kg MS for reinvestment in the business – the equivalent of $26m.
The indicative cash payout forecast for the current season is $9/kg MS for the company, which is located at Tatuanui near Morrinsville.
Last season had a challenging start, marked by a wet spring and limited sunshine hours, which adversely affected pasture growth and quality, and therefore milk production.
However, the El Niño-induced drought that was forecast for later in the season did not eventuate, and instead, regular summer rainfall led to good late-season pasture growth. This enabled production to be maintained, increasing full-season shareholder supply to 2.57% above the prior season.
“We’ve had a good year, a good, robust result in a normal year,” Tatua chief executive Brendhan Greaney said.
Its bulk ingredients division of caseinate, whey protein concentrate and anhydrous milkfat fell in revenue after the unprecedentedly high protein commodity prices seen last year fell to more normal levels.
In the previous year, those commodity prices, especially caseinate and WPC, spiked to record, unsustainable levels, where at peak caseinate was selling for US$22,000 a tonne – twice its long-term average of $8000-$10,000/t, Greaney said.
“We saw it coming because we knew those prices couldn’t stay up there. We knew they were going to come off, and they did.
“The great thing is that the value-add side of the business is continuing to grow year on year for the past 10 years and will continue to grow this year as well.”
The combined revenue from its specialised nutritional products, foods, and flavours divisions was its highest ever, reflecting a continued focus on developing these less-commoditised product offerings.
“It’s been a new record for each of the last 10 years. That value-add business keeps climbing,” Greaney said.
Tatua’s year-end gearing (debt divided by debt plus equity) increased to 23% from the prior year low of 16%, reflecting the funding impact of the foods plant capacity expansion.
Looking ahead to the current season, Greaney said commodity prices are looking strong without spiking to 2022 levels. Nutritional powders is growing steadily and its flavours business has greater capacity to grow.
Its food business had more demand than capacity – which was the main reason it is spending $85m on doubling the size of capacity for that business.
Work is underway on that expansion, which is expected to be ready by August next year.
Greaney said the expansion means that Tatua will not add to its 101 existing shareholders because it will be using more effectively the milk solids it has.
“What we are doing is re-prioritising the cream … into the value-added business. We’ll make less commodities and more value add with the same amount of cream coming onto the site.
“It’s making more of what we know how to make, on plant that is substantially what we already have, to meet demand that we currently can’t supply.”
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