Editorial: Payout misery rough

Dairy farmer Andrew McLeod at his farm in Welcome Bay.

The news keeps getting worse for dairy farmers.

Fonterra has cut its forecast payout to farmers for a second time this year, citing Europe's continuing supply for depressing global prices.

The world's biggest dairy exporter expects to pay $3.90 per kilogram of milk solids in the current season, down from a previous forecast of $4.15/kgMS.

That's below Dairy NZ's estimate of $5.25/kgMS as the level needed by the average farmer to break even.

The drop in the payout comes after the Bay of Plenty Times reported that more than $400 million had already been wiped from the region's economy as a result of the ongoing slump.

Industry leaders are predicting that ongoing hardships, challenges and sheer exhaustion could create an exodus from farms although the banks had expressed confidence, "and are supporting our customers in this low commodity price period".

Welcome Bay dairy farmer Andrew McLeod told this paper that he had trimmed every cost he could including not replacing a staff member but was still running at a loss.

And that was before the latest announcement.

He will not be alone. Farmers across the country will be struggling to balance their books and reflecting on a time, not so long ago, when Fonterra was announcing record payouts that were boosting not only the profits of local farms but also the national economy.

A recent Federated Farmers' poll showed that 11.1 per cent of dairy farmers were under scrutiny by their banks, compared with 7.6 per cent in November and 6.6 per cent in August.

Given the wider economy - including banks - benefited from the dairy boom, it would good to see struggling farmers receive some support.

Two banks, ANZ and Rabobank, told the Bay of Plenty Times they were working closely with their customers to get them through the slump.

Farmers, no doubt, will remember this assistance through the hard times when the payouts eventually begin to lift again.