Record peak milkflows notched up this season by Westland Milk Products - a 3 percent lift over last season to 2.77 million litres a day - have been welcomed by farmers.
"Given the week the West Coast has had, it makes this genuinely good news somewhat bittersweet," said Federated Farmers' West Coast dairy section chairman, Richard Reynolds.
But the higher milkflows showed that Westland was growing as a dairy company, and it was making strategic business decisions such as opening a dry goods store and office complex in Canterbury.
Westland's payout in 2010 was $6.45/kg milksolids, a 41 per cent improvement on the previous year's payout of $4.58 in 2009, and the second highest recorded in the industry.
Westland chief executive Rod Quin credited the improved fortunes to a combination of improved sales and marketing initiatives, and increases in farm productivity and processing capability.
The outlook for the 2011 season was positive.
"Ongoing operational improvements, continued international demand for dairy products and appropriately managed commodity prices and exchange rates will provide Westland with solid returns into the coming financial year," he said.
Westland's peak milk flow in 2010 was recorded on November 12, later than the November 5 peak in 2009, because cold, wet and windy conditions in September slowed grass growth.
Total milk processed at Westland's plant in Hokitika increased 4.8 percent to 502 million litres in the 2010 season due to increased milk supply, and this season Westland has tapped into raw milk Fonterra farmers are compelled to provide to level the playing field in the processing sector.
So far Westland has processed an average 180,000 litres a day of this Fonterra milk, with ten 18,000 litre rail pods transported by rail from Rolleston in Christchurch to Hokitika each day.
"Moving milk by rail has enhanced our ability to process milksolids from sources outside of Westland and has created additional efficiencies within the business," Mr Quin said.
"We can process high volumes of milk efficiently and effectively for sustained periods without compromising milk quality."
Westland predicted milk prices will remain above $6/kg into the next season: "All sentiment in the market is pointing towards a period of relative stability with payouts in the next three to five years expected to exceed $6."
The focus in 2011 will remain on creating operational improvements, enhancing marketing strategies and continuing to strengthen customer relationships as Westland looks to expand further its milk processing capabilities.
NZPA