Westland Milk Products has cut its forecast payout, due to the high value of the New Zealand dollar and declining commodity prices.
The Hokitika company expects to pay between $6.30 - $6.60 per kg of milk solids for the 2011-2012 season to July, down 30 cents on the last forecast.
Westland's final payout will be announced in September. Last season it paid farmers $7.80 per kg of milk solids.
Westland has almost 400 suppliers.
Chairman Matt O'Regan says milk production is up 13% on last year.