29 Aug 2014

'Hell of a drop' for West Coast farmers

8:50 am on 29 August 2014

West Coast dairy farmers have been warned to prepare for some serious belt-tightening.

Milk separator equipment at a dairy factory.

Westland Milk has revised its payout forecast to $5.40-80 per kilogram of milk solids. Photo: PHOTO NZ

The warning comes from Federated Farmers West Coast dairy chairperson Renee Rooney, after the region's dairy co-operative, Westland Milk Products, cut its forecast milk payout from $6.40 per kilo of milk solids to a range of $5.40-80 per kilo.

The company said it was due to a big drop in international dairy prices, especially for skim milk powder, which makes up a significant proportion of its production.

Mrs Rooney said the 60 cent reduction was a "hell of a drop" in less than a month and farmers needed to redo their budgets and cashflows.

Federated Farmers national dairy farmers chair Andrew Hoggard thought Fonterra suppliers should be budgeting for a similar payout, even though Fonterra is holding its forecast at $6 in the meantime.

"All the experts you hear talk are pointing towards mid-$5," he said.

"Fonterra seems a little more upbeat than them, but the risk remains that we could still end up in the mid-$5. So I guess the advice for farmers is, we've still got to play it tight for the rest of the season."

Get the new RNZ app

for ad-free news and current affairs