30 Sep 2015

Final payout of $7.10 for smallest dairy co-op

8:37 am on 30 September 2015

The country's smallest dairy co-operative, Tatua in Waikato, has delivered its farmers a final milk payout of $7.10 for last season.

Tatua dairy plant at Tatuanui.

Tatua dairy plant at Tatuanui. Photo: RNZ / Alexander Robertson

The co-operative is owned by 114 farmer shareholders within a 12-kilometre radius of the factory.

Its payout sits higher than most other dairy companies because of its mix of value-added speciality food products and bulk dairy ingredients, such as caseins and anhydrous milk fat.

In announcing its annual results, Tatua chief executive Paul McGilvary said the co-operative was retaining 63 cents a kilo from its total earnings for the year of more than $121 million, or $7.73 a kilo.

Mr McGilvary said although the earnings were down and the milk price had fallen from its record high of $9 per kg of milk solids last season, it was still a strong result.

"I think there were two key highlights... the market was very difficult, in general terms the prices were falling and it was oversupplied with milk, but even in that difficult market, our product mix of caseinate, AMF and WPC was preferred.

"In other words, the return per kilogram of solids used in those products was higher returning than the equivalent solids used in milk powder, so we had a product mix advantage all year.

"The second thing was, as the price milk fell, the margins in our specialised added value products grew quite significantly because they used milk as an input cost and as the price of that input went down, therefore their margins grew. So they were the two major reasons for the pretty strong result last year."

He said the co-operative was expecting the 2015/16 season's milk supply to be similar to last season's 15.7 million kilograms of milk solids.

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