Farmers supplying livestock to Silver Fern Farms will not have to pay the cartage from their farms to processing plants from December 1.
This will bring the South Island into line with the North Island, where meat processors have paid the cost of cartage for many years.
SFF chief executive Keith Cooper said while the move ensured consistency between the two islands, it would also create efficiencies for the company, ensure best practice in managing livestock transport, including animal welfare, and would reduce the company's carbon footprint.
It would also provide transparency in the South Island, he said, where some companies met cartage payments as supply inducements.
"This removes this distortion in pricing comparisons and is a continuation of Silver Fern Farms' strategy of creating the same opportunities for all supplier partners, much in the same way we ceased procuring livestock via third-party livestock dealers with preferential pricing arrangements, although some companies continue this practice."
Previously, co-operative members paid the transport cost to their nearest processing plant.
While it could be seen as subsidising suppliers in remote regions, Mr Cooper said the benefits from managing the transport of stock outweighed any criticism.
"However, on a wider scale it paves the way for us to take overall management of all livestock transport, which will serve to reduce costs by co-ordinated livestock management."
Mr Cooper said in an interview the move would allow SFF to better co-ordinate the movement of stock but to also ensure quality assurance standards were applied to the handling of stock.
Customers were demanding assurance animals were treated well while being transported and Mr Cooper said SFF, as the bill payer, would be able to ensure those standards were met.
