Fonterra announced on Thursday that it had cut its milk price forecast from $4.70/kg of milksolids to $4.50 for this season.
When combined with the previously announced dividend range of 20-30 cents a share that amounted to a forecast cash payout of $4.70-$4.80 for the season.
Peacocke said despite milk prices easing through this season, there was a shortage of good quality dairy farms and prices actually rose for what he called second tier properties, those on the fringe of traditional dairy areas or with mixed contour.
That confidence was still being reflected in Southland where later calving meant property transactions were still happening later than other parts of the country.
Peacocke said demand for quality Southland dairy farms was still strong and that interest was extending to demand for quality dairy support units in close proximity to farms.
The lower forecast was unlikely to result in a surge of farms coming on the market as banks tended to work with clients to manage them over difficult times.
Peacocke did not believe the land price would collapse in response to the lower milk price because there would not be a deluge of properties put up for sale.
He said farmers considering selling might delay listing their farms until the milk price improved.
An underlying current of confidence in the dairy industry remained, he said, shared by lending institutions forecasting next season’s milk price being $5.70 to $6/kg MS.
Because of that Peacocke said no one was taking a “dramatic stance” in response to the weak forecast.
“Farmers will carry on.
“They may be less dependent on bought-in feed and more heavily cull low performing cows so they focus more on their top performing cows.
“There is a variety of things they can do to get through the short term blip.”
