New Zealand Farming Systems Uruguay is running at 10 per cent below target milk production, according to figures announced at its AGM.

Shareholders heard that milk production per cow across all farms was up six per cent, but total production was likely to be 90 million litres – well short of its 100 million litre target.

Chief Executive Alistair de Raadt says volumes are likely to stay low for some time.

“We produced 68 million litres last year, so 30 million growth on top of that, and we forecast 100 million this year with the increased herd numbers.

"We had 36 sheds as well so an increased yield all around, but just short of what we’d forecast."

NO PREFERRED DEAL FOR PGW

Farming Systems has formally cut ties with former owner PGG Wrightson.

Olam International took 78 per cent control of Farming Systems last month in a 70 cents per share takeover offer.

Chief Executive Alistair de Raadt says at the request ofthe Singaporean food company, a preferred supplier arrangement with PGW will now not go ahead.

"Olam did discuss it with the board, and their view was that they would prefer to maintain flexibility in sourcing requirements in Uruguay and didn’t see a need to sign a preferred supply agreement with PGG.

"Having said that, our relationship will continue to be very strong, and they remain our most important supplier over there.”

The Olam takeover has also brought about a changing of the guard on the Farming Systems board.

Businessman Craig Norgate, the driving force behind Farming Systems, has stepped down, as have co-founder Murray Flett and former chairman Keith Smith.

Four Olam nominees will be appointed.