A $6 billion drop in dairy farmers' incomes this season is a blow to the wider economy, no question.
But the impacts are not all bad, particularly for borrowers and for exporters.
The immediate drop in the exchange rate when Fonterra announced its revised payout forecast of $4.70 a kilogram of milksolids - a 44 per cent drop from last season's bumper level (ignoring dividends) to a seven-year low - reminds us that the financial markets see the kiwi dollar as a commodity currency.
It has shed more than 11c against the US dollar over the past five months, though that has a lot to do with the market responding to more cheerful economic news out the United States. On a trade-weighted basis the New Zealand dollar is down 5.5 per cent over that period, a few steps in the right direction for exporters although still some way, the Reserve Bank thinks, from sustainable and justified levels.
Normally, a lower dollar would put upward pressure on tradeables inflation and be potentially negative for borrowers. But right now there isn't really any global inflation to import.
Oil prices, in particular, are falling and in the year ended October, while the country exported $16.6 billion worth of dairy products, it imported $8 billion worth of oil and refined petroleum products.
From the central bank's point of view, the more important impact of a slashed dairy payout will be the drop in domestic demand, first in the country towns and then, with a lag, in the main centres. It will have to weigh that against the positive effects of global oil prices at five-year lows, leaving consumers with more to spend on other things.
It is a key reason that higher interest rates are now seen as an increasingly distant prospect.
As a rough indication of the sensitivity of the economy to the dairy payout, modelling by the Institute of Economic Research four years ago found that a $1 a kilogram increase in the payout benefited the economy to the tune of $1.2 billion.
That included not only the boost to gross domestic product but also the associated impact of stronger terms of trade, which means we have to export less to pay for a given amount of imports, making the country better off as a whole. Presumably these effects are symmetrical and work the other ways when the payout is cut.
ANZ's rural economist Con Williams says that when he puts the latest forecast into the budget for the average farmer it comes out below break-even. "Farmers will now be taking the knife to discretionary and capital spending to balance the books."
But relatively high capital expenditure in recent years suggests there will be some give in the budgets to ride out one tough year, he says.
And Bank of New Zealand economist Doug Steel says farmers appear to have saved a good chunk of the record payments associated with the previous season. "Agriculture bank deposits are up nearly $1.5 billion over the past 12 months," he says.
Will it be a case of just one bad year, though? Williams is not so sure.
He points out that Fonterra's forecast assumes international prices will improve next year.
China, the Middle East, Japan and Europe, all of which have their challenges at the moment, account for the majority of dairy exports. Ukraine-related counter-sanctions by Russia have disrupted the market, while supply is running strong, not only in New Zealand but also in other key exporting countries.
ANZ is currently forecasting a payout of $6.50 a kilogram of milksolids for the 2015-16 season, which would be $1.80 better than Fonterra has pencilled in for the current season.
"But there are clear downside risks to this, given the global backdrop for economic growth in key importing regions and commodities more generally," Williams warns.
"If we don't see a recovery in international prices by next May, operating expenditure will need to be trimmed dramatically to avoid a blowout in debt."
Westpac chief economist Dominick Stephens says rural confidence has remained surprisingly robust in the face of falling payout forecasts - so far.
"The general sentiment has been that farmers can weather one low payout. We suspect that the reality of a payout as low as $4.70 is going to dent that confidence. What is more, we are now forecasting a fairly low farmgate milk price of just $6.20 for the 2015-16 season, and that is assuming that global milk prices rise rapidly over 2015."
ASB economists have cut their payout forecast for the 2015-16 season by 50c to $6.00, citing lingering price weakness.
And BNZ's is even lower at $5.70.
Another casualty of the lower payout is likely to be the oft-promised return to black ink for the Government's bottom line this year.
By the end of October, a third of the way through the fiscal year, tax revenue was running 7.9 per cent ahead of the same period last year. But that rate of growth is unlikely to continue over the rest of the financial year, the Treasury says, because of the flow-through from lower dairy prices and the low inflation rate. Both have the effect of reducing nominal GDP, which is a proxy forecast for the tax base.
The pre-election economic and fiscal update compiled in August already forecast a slowing in nominal GDP growth from 7 per cent in the year to June 2014 (which benefited from terms of trade at 40-year highs) to 5.2 per cent in the current year and 4.2 per cent in 2015-16.
That track is liable to be revised down further in the half-year update next week.
Finance Minister Bill English says reaching surplus this year will be "challenging" though he still has, ahem, every confidence we can make it when the final accounting is concluded late next year.
It really doesn't matter. Even if there is a modest deficit instead of a modest surplus this year, the markets will look at the progress from a deficit of $18.4 billion or 9 per cent of GDP in 2011 (when the fiscal impact of the earthquakes compounded the effects of the recession) and at net government debt well below 30 per cent of GDP, compared with 80 per cent across the G20.