The country’s second biggest dairy company has announced changes to its payment systems, designed to improve supplier cash flow.

In a move which is attracting interest from other dairy co-operatives, Open Country Dairy unveiled a new plan to pay its farmer suppliers more regularly for their milk during the year.

Open Country chairman Laurie Margrain says the move is intended to reduce pressure on both debt gearing and uncertainty on many farms around New Zealand.

 “Virtually everybody in the industry has been saying there’s big problems with working capital and cashflow for some time, because not enough of the suppliers’ money gets returned to them earlier.”

Laurie Margrain says the company has learnt lessons from recent years about predicting the value of commodities too early.

 “Over the last year, we’ve seen enormous volatility, so even with the best will in the world, trying to look ahead even 12 months is a nightmare.

“You do know in shorter periods what the value of that milk has been, so If you can calculate that, which you can, and you’ve processed it and shipped it and been paid for it, why not return that money to the supply base?

“It’s their money, after all.”

Federated Farmers Waikato Dairy spokesperson James Houghton says the changes might well be attractive to suppliers of other dairy companies, but probably won’t be a deal breaker.

 “You’re going to have a lot more fluctuations in what you get paid each month, by going to Open Country.

“I think it might suit some people, who have been able to make good returns from that.”