Tatua Co-op sets dairy payouts

  • 29/09/2015
Tatua Co-op sets dairy payouts

By Jonathan Underhill

Waikato-based Tatua Co-operative Dairy Co has set the 2015 payout for its farmer suppliers at $7.10 per kilogram of milk solids, the highest of any New Zealand processor, while affirming a drop in payout for 2016.

Revenue rose to $286 million in the 12 months ended July 31, from $266m a year earlier, the company said in a statement.

Earnings before milk payout, retentions and tax fell to $121.2m, from $136.4m a year earlier.

Chairman Stephen Allen said the decline in pretax earnings reflected an increase in overall milk collection from farmers in the latest year and the "dramatic decline" in dairy prices.

He told BusinessDesk that Tatua had to set its payout at a level that ensured it had enough milk for the season.

But it was trying to pay farmers "a fair return for their milk and make continued investment in the company".

The company took in 15.7m kilograms of milk solids from its suppliers in the latest year, up from 13.2m kgMS in 2014.

It typically buys in about 20 percent of is requirements each season from neighbouring producers Open Country Dairy, although it also sells product to them.

Tatua has already given guidance for the 2015/16 year of $6/kgMS before retentions as it struggles with the same weaker prices that have dented Fonterra and other rivals.

"We are mindful that the 2015/16 year will be challenging," Tatua said.

"Demand remains fragile, climatic conditions are uncertain and we anticipate continuing volatility in prices and exchange rates."

Tatua managed to underpin earnings in 2015 through a product mix of caseinate, whey protein concentrate and anhydrous milk fat, and improved margins on specialised, added-value products that benefit from a lower milk price.