By PHILIPPA STEVENSON agricultural editor
New Zealand Dairy Group shareholders have raised the price of entry to their company after voting for a user-pays scheme to cover the costs of new processing factories built to cope with a rising milkflow.
Just under three-quarters of the votes cast at a special meeting yesterday
of about 1200 shareholders favoured the "peak rights" proposal.
The vote brought the immediate lifting of a two-year-old moratorium on farms converting to dairying in the company's supply areas.
Most of the pent-up milk wave will wash in from the South Island, where the company has received 147 of the 150 supply applications on its books.
The extra entry cost for peak rights of around $200,000 for the average Southland farm is unlikely to deter many.
It takes an estimated $2.4 million to set up a farm in the southern province, based on paying $1.1 million for 140ha, $200,000 to buy shares in the company, about $511,000 for 365 cows, $400,000 for a 50-bale rotary dairy and now the $200,000 for the peak rights.
The number of rights required are calculated on a farm's expected heaviest production day because factory capacity is built to cope with maximum milk flows, which usually occur in October.
Existing farmers expanding their farms will also have to pay $30 for each peak right to cover every extra litre of milk produced above their historical average on their peak day.
The company expects to get $4.4 million from peak rights in the first year, and $330 million over five years, with the resulting stronger balance sheet boosting payout to farmers by at least 3.5c a kilogram of milksolids.
Next year's payout is expected to be $4.50 a kilogram.
Chairman Henry Van Der Heyden said he was pleased with the result and the voter turnout. Well over half the company's 7500 shareholders voted by proxy or attended the meeting.
Shareholders rejected a plan to allow sharemilkers with herds but no land of their own to hold shares in the company. The constitutional change needed a 75 per cent majority but gained only 69.8 per cent.
