High milk prices have been blamed for the downsizing of specialist cheese maker Kaimai. 

Kaimai chairman Wyatt Creech has told shareholders the company had closed its production facilities and café at Te Mata, and that it would also be abandoning numerous product lines.

Eight staff have lost their jobs.

Creech says the company will make a 2.5 million dollar loss in 2011 and laid the blame squarely on the high price of milk which, he said, is crippling the specialty cheese sector.

Complicating Kaimai’s operations is the fact the company doesn’t know how much it is being charged for milk until Fonterra’s final payout is determined.

This means the Kaimai enters into retail supply contracts not knowing the true cost of its raw ingredients – leading to losses when the price of milk spikes, as it has this year.