Pain for farmers widely shared

Pongakawa dairy farmer Trudy Williams. Photograph/Andrew Warner.

The latest slash in Fonterra's forecast payout will have a big impact on the Bay economy.

As reported in the Bay of Plenty Times Weekend, it is expected to cost the region $177 million and put jobs under threat.

Last week the dairy giant cut its farmgate milk price forecast from $5.25kg milk solids to $3.85kg due to the continued significant imbalance in the global dairy market between weak demand and surplus supply. The drop means a further reduction of $150,000 for the average dairy farm income for this season.

The fallout is already being felt in the region.

Pukehina dairy farmer Trudy Williams matter-of-factly says: "some of us will get through it and some of us won't".

She knows of employees who have already lost their positions and predicts there will be more job losses.

The fall in the forecasted payout will not only hit the dairy sector.

It will also hit the contracting firms and the many businesses that rely heavily on diary farmers for their income.

Fonterra believes the signs coming out of China indicate demand will eventually pick up again.

However, commentators say there is no hard evidence to indicate the global dairy slump will bottom out anytime soon.

The only comforting news is that the Bay of Plenty is more diverse than other regions and is performing strongly on the back of booming kiwifruit, avocado and building sectors.

It looks as though the dairy farmers have a long, gruelling road in front of them and the wider economy will share some of their pain.