Local milk products producer Westland Milk Products is reducing its payout to farmers.

It will go down by 40 cents for the 2014/15 season to $5 to $5.40 per kilogramme of milk solids.

It's blaming it on continuing global oversupply of dairy products and the impact of a relatively high New Zealand dollar.

Chairman Matt O’Regan says the pay-out will undoubtedly be a challenge for many farmers and budgets will be tight.

He says company has systems and processes in place to offer every support it can to shareholders who might struggle financially.