Dannevirke: Dairy decline hits High St

By Christine McKay

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Dannevirke's High St retailers are feeling the pinch as winter arrives but, with more than 8000 vehicles passing through each day, it's not all doom and gloom. Photo / Christine McKay
Dannevirke's High St retailers are feeling the pinch as winter arrives but, with more than 8000 vehicles passing through each day, it's not all doom and gloom. Photo / Christine McKay

Our High St retailers are feeling the squeeze but tradesmen are having a boomer year.

"The downturn in the dairy sector is hurting main streets throughout the Tararua," District Mayor Roly Ellis said, as farmers face the lowest opening advance rate in at least the past 14 years.

Dannevirke businessman Suresh Patel, chairman of the Chamber of Commerce, agreed there was an overall downturn in retailing at the moment. "A lot of business owners are saying their turnover is less than this time last year, but I don't think this is a total reflection of the lower Fonterra payout," he told the Dannevirke News.

"On the other side of things, our tradesmen are exceptionally busy. A lot have work for the next six months."

Mr Patel said the Dannevirke CBD was quiet at the moment but that was to be expected at this time of the year.

And the financial pain is also being felt by the sheep and beef sector, Dannevirke accountant Simon Curran, a partner at MCI and Associates, said. "They're really hurting too - the lamb price is a disaster."

Looking at alternatives such as bull beef, however, doesn't come cheap.

Mr Ellis said the price for store stock had "gone through the roof" as dairy farmers went into bull beef.

"A hell of a lot of dairy stock has been sold and there's not as many calves on the ground, so it's difficult trying to procure fat stock."

At a Dannevirke weaner cattle sale in April, the market was hot with a top price for a beef steer $1048.

Wairarapa MP Alastair Scott acknowledged dairy farmers were suffering, but told the Dannevirke News that he believed the economy nationally was "bubbling along".

"High Auckland house prices are driving people away from the city and hopefully that will bring new faces, new money and kids to this district," he said.

Meanwhile, DairyNZ is committed to supporting dairy farmers following the announcement by Fonterra of an opening forecast farmgate milk price of $4.25 a kg of milksolids for the 2016-17 season.

"The $4.25/kg MS is not a surprise, although the particularly low opening advance rate of $2.50/kg MS plus capacity adjustment is tough for farmers who will find the winter particularly difficult," DairyNZ chief executive Tim Mackle said.

"The break-even milk income required for the average farmer is $5.25/kg MS, yet under this forecast scenario they'll only be receiving $4.45/kg MS all up in terms of farm income, including retro payments from last season and dividends.

"We will see continued pressure for farmers to manage cash flows for the first six months of the 2016-17 season which will, for many, lead to further increases in debt to get their businesses through another low milk price season."

Dairy cash incomes (from milk and livestock) at the announced milk price are expected to be 10-15 per cent higher than last season, but it will still be challenging for many farmers to reduce farm working expenses further, and interest expenses will be higher from increased borrowings over the last two seasons.

"DairyNZ has already boosted its Tactics campaign to help farmers cope. We're providing advice and wrap-around support for our farmers to help them with all the decisions they will have to make," Mr Mackle said.

"We'll particularly need to continue our support for those farmers who have just bought farms or who are first-year sharemilkers, as they will have more debt to manage.

"Lower order sharemilkers are also under immense pressure as they have little wriggle room."

- Hawkes Bay Today

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