By LIAM DANN primary industries editor
New Tatua chairman Steve Allen has warned farmer shareholders not to expect the payout premium that they currently enjoy over Fonterra to continue indefinitely.
Allen, who this week took over from Alan Frampton, said Tatua was not immune to the big economic factors that were hurting
other primary producers. The company was likely to feel the effects of the high kiwi dollar in the coming year, he said.
Over the past three years Tatua's payouts to its farmers have been up to $2/kg of milk solids higher than Fonterra's.
"It's too early to determine a pattern," Allen said. "Don't bank on enjoying the current gap between the two organisations."
The comparisons to Fonterra started to wear a bit thin after a while, he said. "We have a lot of respect for what Fonterra has set out to achieve and it looks to me from the outside like they are on track."
While Tatua's 132 farmer shareholders had enjoyed their premium payouts they were realistic about the future, Allen said.
Tatua had an advantage over Fonterra in terms of currency hedging, because of value of the dollar at the time it left the Dairy Board (January 2001), he said.
Over time that advantage was expected to flatten out.
Farmers understood that a significant component of the margin they had was due to foreign exchange gains and that those weren't necessarily repeatable.
Allen, 42, has a long history with Tatua. He was born into the co-operative. His family has been supplying the tiny Waikato dairy group with milk since the 1920s.
Allen left the farm as a teenager to study, completing a degree in Physical Education at Otago University and a commerce degree from Auckland University. After graduating he spent several years working with IBM.
He went through the computer company's graduate programme and ended up doing a lot of work with the major supermarket chains.
He returned to the family farm 10 years ago. Allen has been a director on the Tatua board for seven years.
Working for Tatua as farmer and at a corporate level was a great way to get the best of both worlds, he said.
"One day you can be out there amongst it on your own farm and then next day you can be applying your skills to some international marketing dilemma."
