Dairy farm prices falling

REINZ said Fonterra's move to cut its farmgate milk price forecast had confirmed widespread expectations among farmers. Photo / Brett Phibbs

Dairy farm prices are dropping, according to latest sales figures.

The institute's Dairy Farm Price Index fell by 13 per cent in the three months to July compared to the three months to June. Against July last year, the index fell by 12.1 per cent.

REINZ rural spokesman Brian Peacocke said Fonterra's move to cut its farmgate milk price forecast to $3.85 a kg of milksolids from $5.25 a kg had confirmed widespread expectations among farmers.

"The key issue for many is the time prices are likely to remain at current levels, with particular concerns being expressed for lower order and 50/50 sharemilkers," he said in a statement.

"Banks generally appear to be supportive, but conversations are taking place given circumstances being appropriate," he said.

Across the board, culling of lower performing cows was evident, and the retention of surplus assets was under a review.

The news was brighter for other sectors, with record prices being paid for beef, good prospects for lamb, improving prices for wool and a buoyant market in kiwifruit and pipfruit.

Across the board, the REINZ All Farm Price Index fell by 2.9 per cent in the three months to July compared to the three months to June, but rose by 3.9 per cent compared to July 2014.

The index adjusts for differences in farm size, location and farming type, unlike the median price per hectare, with does not adjust.

For the three months ended July, the median sales price per hectare for dairy farms was $35,304, compared with $35,531 for the three months to June and $36,673 for the three months to July 2014.

The latest GlobalDairyTrade auction showed an increase in prices - the first lift since March this year.