27 Apr 2011

Kaimai cuts contracts because of milk price

7:45 am on 27 April 2011

The Waikato cheese company Kaimai has halved production and will no longer supply cheese under contract to supermarkets, because the rising price of milk has made that impossible.

Kaimai has closed its Te Mata cheese factory in Hawke's Bay, laid off staff and scaled back production at its Waharoa plant in order to focus on higher-value cheeses for the top end of the market.

The company gets its milk from Fonterra. The price is determined by the forecast payout to dairy farmers.

But the executive director, Wyatt Creech, says having to pay extra prices for the milk to cover increases in the forecast during the season is killing its contract business.

Mr Creech is a long-time critic of the regulations covering the supply of milk to independent processors and the way Fonterra sets the price.

He supports the investigation into milk prices that the Commerce Commission is currently considering.