In the new season beginning on Saturday, the Northland farmers are lining up to earn a total of $686 million, or $117.6 million more than in the present season.
However, the extra money was no windfall and Northland's Ford and Holden dealers would not find farmers queuing to buy cars, according to Farmers of New Zealand operations manager Bill Guest, of Te Kopuru.
The $3.85kg/MS advance Fonterra paid at the beginning of the present season, when production cost $4kg/MS, had forced many farmers to Hope on the horizon for dairy farmers take out big overdrafts and this debt, compounded by drought problems, had them struggling financially, he said yesterday.
"The $7kg/MS payout forecast is like mouth-to-mouth resuscitation to save farmers heading into the abyss with their banks," Mr Guest said.
Farmers needed future payouts to match the record $8 to $8.10kg/MS they received before retentions in 2010/11.
"The sooner they get back to $8 the better," said Mr Guest, who criticised Fonterra for spending billions on overseas development, while restricting returns to New Zealand farmers. Northland Federated Farmers dairy section chairman Ashley Cullen, who milks 200 cows on 110ha at Maungaturoto, had been expecting the milk price forecast to lift and was delighted it had reached $7kg/MS.
However, he also said he felt farmers needed the extra income to deal with debt incurred during the drought.
With many farmers having deferred debt payments, they could still face a crunch if the final 2012/13 season payout on October 20 didn't cover what they owed, Mr Cullen said.
"We hope they stick to $7 and don't take some of it off us part-way through the season," he said.
Northland Chamber of Commerce head Tony Collins said the extra dairy payout would be good for the whole region.
"It's not just farmers that benefit, we all benefit. It's also going to have a positive impact on our regional gross domestic product, which is a big plus," Mr Collins said.
"It will help offset the issues our dairy farmers have had with the drought over summer and I'd imagine a lot will be used to pay down debt. However, there will also likely be some deferred maintenance done and that will have a spin-off for related local industry."