Dairy price fall 'disastrous'

Whole milk powder prices have registered their biggest fall in 12 months.

Northland farmers woke up to more bad news yesterday as the global dairy price fell yet again, with industry experts terming the result "disastrous" and the effects felt throughout the community.

Whangarei farmer Alex Wright said she felt she had "little room to move" after the latest fall.

"We might have to look at cutting numbers and trying to diversify into beef," she said. "At the moment, we're just focused on getting through the calving and see what things are like in two months' time."

Whole milk powder prices have registered their biggest fall in 12 months. The GlobalDairyTrade auction, held July 15, saw the price index drop 10.7 per cent from the last sale a fortnight ago. Ms Wright said that, in flush times, Fonterra was promoting production expansion, so many farmers had taken on extra debt. Now, as prices plummeted, the leadership had gone quiet.

"It would be nice in extreme situations to get some sort of announcement from our leaders. Fonterra is such a huge business and, for an average person like myself who's busy farming, there's a whole lot of questions," said Ms Wright, who has put her concerns in a letter to Fonterra's board of directors.

The NZX's AgriHQ analyst Susan Kilsby said the longer the GDT trended downwards, the more likely it was that Fonterra would have to revise its 2015/16 season forecast of $5.25 per kilogram of milk solids. Fonterra's board will consider its 2015/16 forecast at its next meeting, on August 7.

AgriHQ's own Farmgate Milk Price was calculated using the latest GDT auction results and put predicted payouts at $4.22, she said. "The majority of farmers can't break even at such a low price."

Northland Chamber of Commerce chief executive Tony Collins said the average cow had generated about $1200 per annum in past seasons.

"That's money that would be being spent in the community. As things get tighter for farmers, they still have their fixed costs to meet."

It was not just the dairy supply chain that would feel the pinch, Mr Collins said. "If you look at the farming communities like we have in Northland, there will be small rural settlements with service stations and dairies and so on - the impact will be felt across a wide range of businesses."

And even the local pub is feeling the pinch of the low dairy payout.

Donice Hall-Morris of Kaipara's Aratapu Tavern said that over the past month trade had slowed noticeably.

"It affects the whole area," Ms Hall-Morris said. "I've talked to a few business owners and they're all saying the same thing - because who are our customers? The farmers. The hospitality business in winter is always tough anyway, now some are still coming in but they're ordering a bowl of chips instead of a steak."

Ms Hall-Morris said the price of milk was on everybody's lips.

-It is unclear whether any Northlanders will lose their jobs as part of a nationwide restructure that will see dairy giant Fonterra axe 523 staff. The company is struggling with lowering dairy prices and a Fonterra spokeswoman said a regional breakdown of where the cuts would occur was not yet available.

-Nation, page 20