'Awesome' Tatua payout leaves Fonterra standing

By PHILIPPA STEVENSON

Tatua dairy co-op is in a league of its own after reporting an exceptional payout of $6.77 a kilogram of milksolids for the 2001-02 year.

The Waikato-based company said yesterday that its 132 suppliers would share in a $62.9 million payday, or an average of more than $474,000 each.

Over the fence, Fonterra's 13,000 shareholders will bank on average $70,000 less from the dairy giant's $5.30 payout.

Last year Tatua paid a record $5.50 but this year's result had even normally reserved company chairman Dr Alan Frampton reaching for superlatives.

"It's almost unbelievable," he said.

But Frampton said it was no longer valid to compare the two companies because they were now in completely different businesses.

Raw milk was the only common factor.

The Tatua result reflected the culmination of 10 years' investment in a highly technical product range, he said.

"It's just now really starting to pay off."

Fonterra has suffered from a fall in commodity prices to a 20-year low but Frampton said Tatua was "a little bit buffered" because market demand for some of its specialised nutritional products was not declining.

But a Tatua shareholder said comparisons were inevitable and "we feel sorry for those poor buggers".

Tatua's result was "fantastic, awesome", said the farmer, who did not wish to be named. "We are absolutely rapt."

On the West Coast of the South Island, Westland Milk Products' 335 farmers will also be banking more than Fonterra suppliers. Westland declared a payout of $5.43.

The company, which makes mostly commodity milk powders, said it had shown its ability to give shareholders high returns in a fluctuating market.

Chairman Ian Robb said he was confident Westland would continue to hold a very strong position. The company also had a more optimistic payout forecast than Fonterra for the present season.

Westland expects between $3.80 to $4, but Fonterra this week cut its figure to $3.70.

Frampton would not be drawn on figures, but was confident Tatua could maintain this year's margin over the Fonterra payout.

Westland production has been growing by around 8 per cent a year, but Frampton said Tatua would not consider increasing milk supply if it meant a cut in payout to existing suppliers.

"What we are trying to do is to make sure the shareholders who have invested in the company over many years get the benefit of where we are going.

"People who come in will have to pay a suitable entry fee - if and when we want to have them."

Tatua processed more than 100 million litres of milk in the year, or 9.3 million kg of milksolids, and had turnover of more than $115 million, up $21 million on last year.

It will also pay shareholders imputation tax credits of 2.4c a kg of milksolids.

Westland processed 337 million litres of milk, and had revenue of $186.7 million, $24 million lower than last year.

Robb said Westland planned to move away from commodity products, a strategy reflected in February's appointment of Dr Barry Richardson as chief executive.

Richardson was the architect of much of Tatua's high-value protein and nutritional business.