Fonterra's performance is not improving compared with that of the smaller Westland Milk Products or Australia's large dairy co-operative, Murray Goulburn.
The executive report to yesterday's Dairy Farmers of New Zealand annual meeting in Wellington said Fonterra's performance was still raising concerns.
"Shareholders have concerns of Fonterra's level of operating expenses, the
costs of processing and the product mix, as compares with the most efficient company, and the performance of offshore investments," the report said.
Overseas investments giving concern included Bonlac, in Victoria.
"When comparisons are made with Westland and Murray Goulburn, the performance gap with Fonterra is not improving."
The report also called for more accurate price signals on the market value of milk.
At the end of the 2002 season, Fonterra dairy farmers were paid $5.30/kg when market returns were much less.
In the 2003 season, some farmers ended production early because of the much lower proposed payout when Fonterra still had customers for more milk products.
In regional reports to the conference, Hauraki-Coromandel dairy farmers noted "payout-wise farmers" had been very critical of Fonterra, but many had not grasped why things were happening.
"Our area is known for its fiery meetings, but this year farmers have been very subdued and more concerned about tanker collections, RD1, and tankers being painted than worrying about the big picture," said branch chairman John Sanford.
Waikato chairman Roy Johnson said his farmers were concerned about the "cheap" milk Fonterra had to supply to independent dairy companies, and Hawkes Bay chairman Robert Anderson said Fonterra's performance had only been "average".
"The company still has to prove it is going to be successful," he said.
Wanganui chairman Robin Brown said Fonterra had spent $72 million on consultants in a year when the average dairy farmer's income fell by $100,000, farmers were having to sell for $600 heifers which a "year earlier were worth $1200".
Stuart Borlase, of Nelson-Golden Bay, decried the fact that the nation's biggest company again had the country's lowest milk payout.
- NZPA
