Milk price rise 'not enough'

Greg Maughan farms in Kakariki Rd, near Marton.

Last month's 50c lift to Fonterra's milk price is good news but Rangitikei dairy farmer Greg Maughan says he isn't out of the woods yet.

The predicted price per kilo of milk solids for the 2016-17 season was increased from $4.25 to $4.75 on August 25. With dividends it will give farmer shareholders an end price of $5.25 to $5.35 a kilo.

The increase doesn't get Mr Maughan to the point where he can pay himself for his labour in the milking shed. He needs $5.50 a kilo for that.

The Rangitikei farmer has one of the most intensive operations around, with 350 cows on 120ha, a herd home and much of their food imported and eaten on a feed pad.

In the face of low prices he has already cut costs where he can - growing more maize feed and cutting his herd by 50.

He's also had to let one staff member go, and is now back in the milking shed himself. He has a lot of debt and has been losing equity "hand over fist".

"It's good news but we're not out of the woods yet. I'm hoping for more. Another 80c would good, and then the dividends of course."

Rural real estate agents have told him the price lift has stimulated a little more buyer interest in dairy properties, but he said there wasn't much optimism out there.

"With the price volatility and environmental impact, there will be a lot more caution around now, and fewer dairy conversions," he predicts.