25 Aug 2009

Banks urged to prevent cash crisis on dairy farms

12:53 pm on 25 August 2009

A dairy livestock specialist is calling on banks to loosen the purse-strings to help farmers heading for serious cash-flow problems.

Paul Brown of South Island Dairy Farmers says banks that were handing money out like water six months ago went to the opposite extreme as soon as the credit squeeze hit.

He says a cash flow crisis is developing on dairy farms because this season's advance milk payment from Fonterra, $2.90 per kg of milk solids, is more than $1 per kg lower than last season's advance.

He says that's a 25% drop in the amount of cash coming into farms on a monthly basis and farmers won't get the full milk payout for the season until the final payment in October next year.

Mr Brown says banks need to improve access to seasonal finance if they are to deflect a cash crisis on farms over the next six months.