Friday, January 29, 2016
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THE INDEPENDENT VOICE OF MID CANTERBURY
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Dorie dairy farmer Neil Brown (left) and Phil Rielly.
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Restrictions DAIRY PRICE DROP: lifted P6
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‘There will only be hardship’ BY MICHELLE NELSON
MICHELLE.N@THEGUARDIAN.CO.NZ
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Fonterra’s shock drop in the milk price payout will signal the end of the road for some Mid Canterbury dairy farmers, an industry commentator says. Recent price falls on the Global Dairy Trade auction indicated a reduction in the farm gate payout was on the cards, however, few of the co-operative’s farmers were prepared for the 45c decline to $4.10 per kilogram of milksolids, announced yesterday. Combined with the earnings-pershare range of 45-55 cents, the total pay-
out equates to a forecast cash payout of $4.50-$4.55kg/MS for the 2015-16 season. Grow Mid Canterbury chief executive Rob Brawley said the latest drop would shave $61 million off the local economy, on top of the $400 million hit last season’s low prices delivered. DairyNZ estimated 85 per cent of farmers will post a loss this season. According to an economic survey released by DairyNZ last year, production costs sit around $5.59kg/MS, consisting of $4.38 on-farm working expenses and $1.21 in interest and debt servicing.
By this formula the majority of farmers will be down a minimum of $1.05kg/ MS, but they will not suffer the downturn alone, Federated Farmers Mid Canterbury dairy chairman Willy Leferink warned. “It is already tough out there and this will make it even tougher, it’s not good for anybody – not for the farmers or any other local businesses,” he said. “Any spending that was happening will stop now – there will only be hardship.”
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