Smallest co-ops pay most and least

Fonterra came in between Tatua and Westland Milk Products with $5.20 per kg of milk solids. Photo / Sarah Ivey

The country's two smallest dairy co-operatives have provided the highest and lowest milk price payout for last season.

Tatua took the honours with a payout for 2008-09 of $5.38 a kilogram of milk solids, while Westland Milk Products was hit hard by the sudden fall in market returns with a payout of just $4.50kg/ms.

Fonterra came in between with $5.20kg/ms.

Unlike Fonterra, which retained 1c kg/ms, Tatua chairman Steve Allen said the company would return all its $66.1 million in earnings before payout and tax to its 112 Waikato shareholders to help them through a difficult year.

Allen said it had been a difficult year for Tatua, which the previous season paid shareholders $8kg/ms.

Group revenue was $205 million and production was back to normal levels of 12.3 million kg/ms after drought decimated production the previous year.

West Coast Federated Farmers dairy section chairman Richard Reynolds said the low payout was not unexpected, as Westland had forecast $4.50kg/ms, which included a top-up from previously retained earnings.

"That's it, there is no more wash up coming, which was as expected."

Shareholders received $7.92kg/ms for the 2007-08 year after 30c kg/ms was retained.

Last season, Westland twice reduced the size of its advance payout - what it paid farmers for milk each month before an end-of-season balance-up - because of falling market prices.

Reynolds said Westland tended to have shorter selling contract periods than Fonterra and it also did not make cheese, the price of which stayed up, while prices for products Westland was strong in, powder, butter and casein, fell sharply.

"When it goes bad [for Westland] it falls quite quickly. When it rises, it rises quite quickly."

While the 2008-09 season was one to forget, Reynolds said a forecast range of $4.70 to $5.10kg/ms for next season was welcomed and could mean farmers made a small profit.

* Final payout 2008-09 season

Fonterra $5.20kg/ms

Tatua $5.38kg/ms

Westland $4.50kg/ms

* Forecast for 2009-10

Fonterra $5.10kg/ms

Westland $4.70 to $5.10kg/

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