A2 Milk’s move to cancel its exclusive manufacturing and supply agreement with Synlait looks like part of a plan to boost its Mataura Valley Milk factory. A2 Milk owns 75% of Mataura Valley Milk buying the Southland dairy company in 2021 for $268.5 million to provide “supply diversification”. A2 Milk this week cancelled the arrangement it has with Synlait Milk, stating Synlait had fallen below delivery standards. Synlait, meanwhile, has hit back disputing a2 Milks ability to cancel the arrangements. Cash-strapped Synlait, is in the process of selling its Dairyworks and Talbot Forest Cheese businesses to pay down debt. The company’s result is due on next Monday. Synlait has reminded a2 that IT holds the Chinese regulatory market licence, which is for a2 Milk’s Chinese-labelled infant formula. Synlait shares fell over 9% to $1.16 by market close. The share price down 70% in the past 12 months.