Fonterra has told its farmer shareholders that it's "not happy" with the fact that it had the lowest milk payout last season, compared with smaller co-operatives Tatua and Westland Milk Products.
Fonterra shareholders received $7.66 a kilo of milk solids cash in hand for last season, well short of the $7.99 paid out by Westland, and $8.00 paid by Tatua.
Matamata farmer Lloyd Downing raised the issue at Fonterra's annual meeting in Palmerston North.
He acknowledged that Fonterra has had a difficult year, but said it was is the lowest paying cooperative in New Zealand.
Mr Downing said that with Fonterra's size and its ability to pay high class people to manage some of the international problems it has had, its performance could have been better.
Fonterra chief executive Andrew Ferrier said the company's management is also very disappointed to have been behind some of its smaller competitors, but he expects to see that turned around.
He said over the last 18 months its core commodity business has lagged behind competitors because of the typically long term contracts that Fonterra operates.
Mr Ferrier said as the market has become more volatile, Fonterra has recognised that the type of contracting it has done in the past no longer makes sense.
He said Fonterra has now shortened its contract book and ultimately he expects Fonterra to provide the most compelling payouts in the country.