3 Jul 2015

Dairy farmers resigned to long wait for milk price recovery

8:30 am on 3 July 2015

Dairy Farmers are resigned to a long wait now for some income relief following the further drop in global dairy prices this week.

Dairy cow.


With no sign of prices bottoming out, analysts said it was likely to be the 2016-17 season before farmers saw any sustained price recovery.

Federated Farmers dairy chair Andrew Hoggard said farmers were constantly having to revise their budgets to cut costs and for him it meant putting farm improvements on the back burner.

"In my case there's a few eye sore things on the farm I'd love to just get on with and fix, you know during that $8.40 payout we sort of ripped through a whole lot of them and we had plans the next season to finish some of those jobs off and really get the farm looking ship shape ...but that stuff is just going to have to wait until we can afford to do it, which is a bit of a pain."

Tight times flow through rural sector

It's not just the dairy sector hoping for a rise in farm gate milk prices.

The tight times dairy farmers are facing are flowing through to rural contractors, who have noticed a significant drop in work because of farmers tightening their wallets.

Rural Contractors Association's president Steve Levett said businesses such as heavy machinery outlets, had noticed a drop in work.

"A lot of contractors have noticed a definite down turn in work load; the dairy sector only spending on what they needed to spend on. There was no additional spending going on, like for re-grassing and putting new grasses this last autumn gone ...they weren't spraying out additional paddocks to upgrade pasture, so basically we're seeing a tightening of the purse strings."

Steve Levett said it was likely the lack of spending will be putting some business under threat, particularly those operating under a high debt ratio.

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