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Dairy farmers remain optimistic as income falls

May 24th, 2012 | By | Category: Front Page Layout, Latest News, News

 

IMAGE: Stuff.co.nz

DAIRY farmers stand to lose up to 40 per cent of their income this coming year, under the new Fonterra payout.

Fonterra announced a 30c reduction in its milk price forecast earlier this week.

This is a reaction to a decrease in world commodity prices, with strong supply across a number of commodities, according to Statistics New Zealand.

Dairy farmers, however, remain optimistic, with longer-term forecasts promising a change in fortunes.

The drop in dairy production prices will affect businesses considerably, says Martin O’Brian, who owns a dairy farm in the West Coast with his wife Diane.

“Like any business, when there’s a 40 per cent drop in income, you have to tighten the purse strings.

This could include putting less fertilizer on the pastures, buying less feed, and buying less machinery, says Diane.

“Some people get rid of their cows, because they can’t afford to feed them.

“It just goes on and on.”

However, the decrease is seen as a normal part of the economic climate, and long-term prospects are not a significant concern, says Mr O’Brian.

“I think the long-term forecast for dairy farming is very good, and I’ll be very surprised if that changes.

“The world needs food, and we produce a very basic food.”

The lower forecast milk payout price is the key factor behind the 2.2 per cent drop in prices received for dairy cattle farming, according to the Producers Price Index: March 2012 Quarter.

The lower milk payout drove a fall in agricultural prices, with sheep, beef, and grain down 2.1 per cent.

Overall, the prices paid by New Zealand producers in the 2011/12 year increased by 2.3 per cent, while the prices received by New Zealand producers increased by 1.6 per cent.

The prices that were received by farmers of sheep, beef cattle, and grain were down 2.7 per cent, compared to the previous quarter.

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