Craig Maxwell, his wife Kathy, and their daughter Penelope have been living on their dairy farm in Paparimu just south of Auckland for 25 years.

It is a big part of who they are as people and a lot of time, blood and sweat has been poured into it.

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News of Fonterra's announcement, informing New Zealanders that the farmgate milk price is set at $3.85, is not welcome.


"It is obviously disappointing but not surprising," he said. "Nobody is going to be shocked by that figure, but no one is going to be happy."

For the past two months, Maxwell and other farmers have known a drop in price was likely.

"People have been asking, how are we going to survive? It is a basically battening down the hatches to get by until it improves," he says.

"Nobody is making any money. If it goes down to $4 or below we will have to make decisions about a lot of things."

Fonterra's announcement has not come at a good time. It is calving season, one of the most stressful times on the farm.

"It is a time of year when share-milkers have a lot of extra expense and their income is quite low. Last month was a zero cheque hence the overdrafts going up."

Everyone will suffer and Maxwell expects there will be flow on effects in the economy.

"Young guys starting out who have big mortgages and overdrafts, they have got to be hurting. They will be talking to the bank and farm managers about the best way forward is.


"The other category who will suffer the most is people who have increased production in the past two or three years and they are having to share up to supply milk. Not only have they not got a lot of income but they have to find money to share up to actually supply Fonterra," he says.

"The guys that might make it on a $4 pay out without making a loss would own their farms, not have a mortgage, own their own cows and milk them. They might get through without making a loss."

When the prices dropped in 2008, Maxwell says things were a stretch but "you got through".

"But the circumstances were different back then. The cost of living and going business has gone up now."

Farm life always has its ups and downs, as does every industry, but this year is different.

The announcements have come as a surprise to many farmers who were expecting a change in tide, Maxwell says.


"We expected the prices to bounce back this season but it hasn't, it has continued to go down. When you look at the graph there are always ups and downs but we are in a severe down at the moment."

One more season of bad pay-outs could see many leaving the dairy industry, he says.

"You would like to think things will get better but it would only take a season or two [of low prices] before you would see people starting to sell up and getting out of it," he says.

"Farmers are not happy. It is tough down on the farm."