Sharemilkers feeling pain of low prices

Low milk payouts are hitting sharemilkers harder than farmers, giving rise to couples who are quitting and others just able to hold on.

It's the second year of low global milk prices, with another one possibly to come.

Dairy farmers are hurting but sharemilkers, who only get a percentage of the payout, are hurting more.

Fonterra is paying $3.90 for a kilo of milk solids.

Nathan and Lois Smith are 50:50 sharemilkers on a 173ha Turakina Valley farm.

They will get just half of what Fonterra pays - $1.95 for every 10 litres of milk collected.

Because they are not the landowners they will not get the early dividend Fonterra is paying its shareholders this year.

The Smiths are working 50 hours a week and own the farm's herd of 500 cows and its vehicles. The $60,000 profit they would have got with higher prices is gone, negating their work for the last two years.

"We're not paying debt off. We're not saving and for the foreseeable future we can manage to carry on - just."

The couple also own a 200ha run-off and graze dairy heifers and beef cattle.

Mr Smith said the good beef prices had saved them this year.

They are now looking to sell 150 cows and move the farm to a lower cost grass-fed system, but finding someone to buy the cows isn't easy. They can still borrow, and haven't yet exceeded their budget.

Mr Smith said Fonterra should have put some of its 123 per cent increased profit into paying higher milk prices to help sharemilkers.

"It's very tough on us. As far as I'm concerned that money could've gone on milk price. They're not supporting our industry."

He feels for lower order sharemilkers, who have less ability to borrow.

Tony and Kylie James, who milk a herd of 240 cows near Waverley, are lower order sharemilkers.

They own neither cows nor land and get just 22 per cent of the price Open Country Dairy pays for their milk - which amounts to 79 cents for 10 litres.

If they were being paid a salary for their work it would be $80,000.

As sharemilkers they'll be lucky to make $50,000 this year and they are quitting at the end of May.

Mr James will be able to go back to his former job of builder.

"It's silly working so many hours and seven days a week for nothing. We're not even making a wage," he said. "We've got ambitions. We're not going to go ahead staying here so we've got to be proactive and move on."

Landowners whose sharemilkers leave have the choice of milking themselves or hiring managers or contract milkers.