Hokitika-based Westland Milk, New Zealand's second biggest dairy cooperative after Fonterra, said it would cut its forecast farmer payout for 2014/15 by 40c a kg of milksolids to a range of $5.00 to $5.40 a kg.
Advance payments to shareholders will also be adjusted to reflect the lower dairy prices and, therefore, the lower cash flows into the business, chairman Matt O'Regan said.
"This will be unwelcome news for shareholders, but not unexpected," O'Regan said in a statement.
"At our October shareholder meetings we warned suppliers that the high level of in-market stocks held by dairy customers was producing downward pressure on prices, especially in the area of bulk milk powders where the majority of our business is still conducted," he said.
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