What is WHA? I looked it up and it is not a stick code listed...

What is WHA? I looked it up and it is not a stick code listed that I can find. Very interested in exploring green pastures, or in the case of milk suppliers right now, browning pastures. Hot summer, high overall average NZ Dairy farmer debt levels (up from 10B to 40B NZD since 2003), a messy trade war creating market uncertainty on demand, heavy and soon to be heavier government regulation pushing up costs of production and the ever prevalent downward price pressure on producers by two key market bulk buyers (A2 and Fonterra).

If you understand the model and the market as it is now, you will understand why A2 will continue to have growing margins in the short and medium term whilst companies such as Fonterra will continue to experience lower profits - Fonterra is owned by the shareholders (who are largely the farmers themselves) who have a vested interest in keeping the milk payout higher and thus shareholder return lower.

I am watching KTD very closely, and interested in how they may work with or against Synlait in the future.

A2 buys its milk from Synlait and as such can apply wholesale price pressures to keep the supply chain lean, essentially you would envisage lower profits on average for farmers but also higher returns for Shareholders of A2. The price of A2 milk paid for by the customer is the additional margin for which will see the company continue to expand into areas in which Fonterra simply cannot do in its current form.

Medium to long term this is fantastic for A2 for overall sales but also even better for Synlait which will have a higher demand for milk in a market which is constrained by restrictive government policies surrounding Dairy Farming.