Westland Milk Products says it has systems to support shareholders who might struggle financially, after dropping its forecast payout by 40c.
The forecast for the 2014-15 season was now at a range of $5-$5.40 and, while unwelcome news for shareholders, it was not unexpected, chairman Matt O'Regan said.
He cited a continuing global oversupply of dairy products and the impact of a relatively high New Zealand dollar.
The payout would ''undoubtedly'' be a challenge for many farmers and budgets would be tight.
The company had systems and processes in place to offer ''every support'' it could to shareholders, Mr O'Regan said.
Fonterra was expected to revise down its current milk price forecast of $5.30 next month, on the back of the lowest level of dairy prices in five years.
At Westland's shareholder meetings in October, suppliers were warned that the high level of in-market stocks held by dairy customers was producing downward pressure on prices, especially in bulk milk powders where the majority of the company's business was conducted, Mr O'Regan said.
Bank and industry commentators had also widely predicted the continued downward pressure on payouts throughout the industry, he said.
The inventory position for many of New Zealand's dairy customers was a reflection of some overstocking earlier in the year following supply concerns due to drought, food safety and regulatory changes.
''These concerns are not significant at present and in-market inventory is slowly being consumed.
"But customers are generally comfortable with their inventory positions into the first quarter 2015, so we do not expect a sudden uplift in demand,'' he said.
The lesson from that was Westland's drive to produce more value-added products was the ''right direction to take''.
