By LIAM DANN
Tiny independent dairy co-operative Westland Milk Products is set to beat Fonterra's payout to farmers for the third year in a row.
Westland, with fewer than 400 farmer shareholders, has confirmed that it is on track to pay farmers $3.90 per kg of milk solids.
Fonterra's final estimate is
$3.60.
Last year Westland's payout was $5.43 compared with Fonterra's $5.30 and the year before it paid $5.20 compared to Fonterra's $5.
"It's pretty disappointing," said Dairy Farmers of New Zealand chairman Kevin Wooding - a Fonterra shareholder.
Fonterra farmers would be feeling jaded about their payout, particularly if they were a neighbour to one of the independent farmers, he said.
Fonterra has 12,600 farmer shareholders and has long argued that its size would offer farmers a competitive advantage.
Fonterra spokeswoman Jacky Curson said it was not possible for Fonterra to comment on the difference without seeing Westland's financial records.
"They have a bit of a war chest to draw on," she said.
Westland received about $100 million when the Dairy Board was dismantled in 2001.
Wooding said: "You've got to have a look at the balance sheets to make sure they [Westland] haven't taken any capital out of the business to pay that.
"But we've got to congratulate Westland. They're doing a great job and their farmers are pretty happy with them."
Westland was setting a benchmark that dairy farmers expected Fonterra to aim for and eventually surpass, he said.
Westland's general manager of operations, Hugh Little, said he did not want to comment on why the company had done better.
"We have a good relationship with Fonterra and we're keen to continue that," he said.
Westland had been focused on business costs and efficiencies throughout the year, he said.
Independent Waikato co-operative Tatua is likely to pay farmers considerably more than both Westland and Fonterra.
Chairman Alan Frampton has told his 132 farmer shareholders to expect a payout of about $5 per kg of milk solids.
But he accepts it is unfair to compare Tatua with Fonterra because the two are very different businesses.
Tatua's revenues from value added consumer products buffered it from the commodity price slump.
