Before the changes, the entire payout (the milk production portion and the value-added part) was split between farmers and sharemilkers, usually 50-50, but depending on their agreement. Now that Fonterra is legally obligated to pay this dividend directly to its shareholders, sharemilkers will have to sit down with their farm owner or Fonterra shareholder to ensure their payment matches what was agreed upon in their agreement.
Fonterra has developed the Dividend Related Payment Adjusted Form (DRPA) to be completed and returned before 28 February 2010.The form allows Fonterra to make an adjusted payout from the milk price portion to the sharemilker. If it isn’t completed, Fonterra will simply pay the farm owner or shareholder the entire portion of the payout.
Non-completion of the form will affect sharemilkers because they will have to arrange for a late repayment that in turn will likely affect their income and budgets. A 50-50 sharemilker on a farm producing 150,000kg of milksolids per year may lose out on $15,000.00 next year. But if milk prices remain high and that portion of the payment grew (as Fonterra predicts), they could be out of pocket by $50,000.00. If farm owners, Fonterra shareholders or sharemilkers fail to return the form this may negatively impact on their on farm relationship.
Fonterra is working on a new Sharemilking Agreement, but the current Agreement is still operative.
Any sharemilkers entering into a new agreement in the next few weeks need to be aware of this and negotiate with their farm owner for equal (or whatever is agreed upon) payment of the value added portion of the milk solid payout.
Once they do this, the important thing to remember is to ensure the farm owner returns the DRPA form to Fonterra by 28 February so the sharemilker gets their portion of the value added payout. Remember that this key date also applies to any sharemilkers still under the old agreement.
