Pamu Farms Continues Milk Supply to Synlait Amid Market Challenges

Highlights:

• Pāmu Farms of New Zealand will continue supplying Synlait Milk (NZX: SML) in the South Island, reinforcing its commitment to key industry partnerships.
• Despite an $11 million loss on milk futures, Pāmu’s financial performance has been supported by rising farmgate milk prices.
• The New Zealand dairy sector faces ongoing market volatility, but strategic collaborations between producers and processors are ensuring long-term stability.

Pāmu Farms of New Zealand has reaffirmed its commitment to supplying Synlait Milk (NZX: SML) in the South Island, ensuring stability in its dairy operations despite market fluctuations. The state-owned enterprise operates 44 dairy farms across the country, with half of them supplying Fonterra Co-operative Group (NZX: FCG) and the remainder serving independent processors, including Synlait and Miraka.

Strong Dairy Revenue Despite Market Volatility

Pāmu’s dairy operations remain a significant revenue driver, contributing over 60% of the company’s earnings in the first half of the financial year. However, the company faced an $11 million loss on milk futures, highlighting the risks associated with market volatility. Despite this, rising farmgate milk prices have helped offset losses, providing a boost to its overall financial performance.

Synlait’s Position in the Dairy Market

Synlait has been navigating challenging market conditions, with fluctuating demand and regulatory pressures impacting its operations. By securing continued supply from Pāmu, the company strengthens its raw material sourcing, ensuring consistency in production. At the time of writing, Synlait’s stock has been responding to broader market trends, reflecting investor sentiment toward the dairy sector.

Industry Outlook and Future Prospects

The New Zealand dairy industry continues to be influenced by global supply chain disruptions, climate conditions, and policy changes. Pāmu’s decision to maintain its supply agreements highlights the strategic partnerships necessary for long-term stability in the sector. As farmgate prices remain a key factor in profitability, both Pāmu and Synlait will need to navigate economic uncertainties while

maintaining production efficiency.

With demand for high-quality dairy products on the rise, both companies remain well-positioned to capitalize on future market opportunities.

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