1 Oct 2013

Tatua suppliers celebrate payout

6:35 am on 1 October 2013

Dairy farmers supplying the small Tatua co-operative in Waikato are celebrating after its sizzling pay-out to farmers of $7.40 per kg of milk solids.

It's the highest payout of any dairy company for the 2012-13 season and Tatua's second-highest ever.

It compares with $6.14 per kg of milk solids for the past season by Fonterra and $6.04 for the other co-operative, Westland.

Tatua supplier David Fish said the company's push towards higher-value products had paid off.

"We're getting a wider customer base. We're getting specialist customers wanting specialist products," he said.

Tatua had retained $1.17 per kg of milk solids this year for future factory development to fund a "huge" project in two years' time.

"We're preparing for that now, and that should be the launching pad for perhaps even more specialist ingredients coming out of Tatua," Mr Fish said.

Tatua suppliers were divided on the retention, with some seeing money had to be put away for development but others believing it should be funded through a loan.

"It's often depending on what age and stage they are within the industry. Perhaps the older ones are saying 'we've done that for long enough, I want all my money'. But being a true co-operative, the benefits will come in the next 10-15 years," Mr Fish said.

Chief executive Paul McGilvary acknowledged it was a large retention, which the company would use to help finance a $65 million dryer.

"It's about $14.6 million that we're holding back, and there possibly will be different views amongst suppliers as to the wisdom of that but the reality is unless we do it now, we actually can't contemplate the dryer," Mr McGilvary said.

"And, of course, if the dryer doesn't proceed, then we're always in a position to make a special dividend to our suppliers anyway."

Mr McGilvary said he believed the current season might be tougher for the Tatua co-operative than last.