By PHILIPPA STEVENSON
Fonterra is warning farmers that its end-of-year payout may drop below the $5.40 a kilogram of milksolids forecast in December.
The mega co-op's directors are telling shareholders at a series of 35 meetings being held nationwide this week that the payout could go as low as $5.20 a
kilogram.
Yesterday, the company also told the stock exchange that it was under some pressure because of reducing international commodity prices.
Further increases in European Commission export subsidies, which serve to push global prices down, could help bring the reduction, the company said.
"During the current season, milk prices have fallen from a high of more than $6 a kg to slightly above $4.50 a kg. Based on current commodity prices and exchange rates, the forecast for the 2002/3 payout is $4.50 a kg," Fonterra said.
%Forecasts would be updated regularly and there was "as much %likelihood of downside as upside", it said.
Fonterra also said negotiations on the alliance with Nestle in Latin America were proceeding more slowly than it had expected.
"Firm proposals for the alliance are expected to be considered within the next quarter."
Meanwhile, the three farmer directors who will be up for re-election this year - the first of an annual rotation - have been chosen by lot.
They are deputy chairman Greg Gent, Earl Rattray and Gerard Lynch.
Nominations for election to the 13-member board will be called next month and postal voting has to be completed by May 31.
The Business Herald understands that the Shareholders Council has recommended the election process be changed to a preferential voting system.
Voting would still be on the basis of milksolids production but shareholders would cast votes for their first and second preference for the position.
The system, which could be operating in time for this year's election, would be used to show a clearer majority for the winning candidate.
