$134 million rise in payout for Rotorua dairy farmers

Rotorua dairy farmer Lachlan McKenzie with 'Spikey', a game-changing machine that could have export potential. PHOTO/STEPHEN PARKER

Dairy farmers' wallets could be set to open as the total payout for Rotorua is expected to jump by $134 million - and boost the local economy, experts say.

Infometrics' estimates show Rotorua's total dairy payout in the 2016/17 season was $365m, up $134m from the previous year.

Senior economist Benje Patterson said although some of the additional money would go into debt repayment ''there will be some scope for modest spending increases by dairy farmers''.

Rotorua dairy farmer Lachlan McKenzie said there would be a ripple effect as farmers spent more cash on productive activities which had been deferred when money was tight.

He was part of a consortium of five farmers that had pumped $150,000 into groundbreaking technology being developed by Pastoral Robotics. The 'Spikey equipment' detects and treats urine patches from cows that could half nitrogen loss from the land.

It was the first one of its type in the world, Mr McKenzie said, and the machine had national and international export potential.

The income of farmers had improved and while they would not be rushing out ''buying boats and fancy things'' it would allow them to hire contractors such as fencers, improve buildings or invest into the environment, he said.

''The only dent in farmers' confidence is possible taxes that could be introduced with the upcoming election.''

Rotorua Chamber of Commerce president John McRae said the agri sector played a massive role in the economy and benefits would flow into the community.

''The numbers I have seen from economists say it has a multiplying effect. So that means for every dollar the primary sector spends it has at least another $1.50 to $2 impact on the economy.''

Contractors, sub contractors and supply organisations to the dairy sector would also receive benefits that were passed on, he said.

''Those organisations employ people who live here in our city and of course those people actually spend money on food, education and the likes which goes back into the local economy.

''It's absolutely fantastic and there is no doubt if the primary sector is doing well, the rest of us get that flow-on effect.''

DairyNZ economist Angie Fisher said its latest statistics from 2015/16 revealed 760 people were employed on-farm, in addition to the 317 farm business owners and their families in the area.

Meanwhile, an example of dairy-related employment included 156 processing and wholesaling jobs in the Rotorua district.

Farmers were likely to spend a little more catching up on deferred maintenance but there would also be an effort by farmers to reduce debt after having had two seasons of low milk prices, she said.

''In the Bay of Plenty region we expect more spending on regrassing to recover pastures for those affected by flooding. And with all the rain this year some farmers will have spent a bit more on feed to improve cow condition.''

The Fonterra milk price forecast was updated to $6.75/kgMS on July 27 from $6.50 for the 2017/18 season.