So it was vital for individual farmers to get good advice from many quarters.
“This will make it really tough for farmers managing their cashflows through the low winter months with the likelihood of little or no retro payments helping to smooth out that cashflow,” he said.
“That price volatility is a fact of life, not an aberration. Everyone, and especially the banks, needs to understand this and work with it.”
DairyNZ is lifting its support for farmers, boosting its Tactics for Tight Times campaign to help farmers cope with what chief executive Dr Tim Mackle said was likely to be a “very tough and grim season”.
The $5.25 forecast would translate into the average farmer’s milk income dropping by $150,000 in 2015-16.
While the breakeven milk price for the average farmer was $5.70/kg MS, under this forecast they receive only $4.75 of farm income, including retro payments from last season, and dividends.
Farm working expenses would need to be reduced to minimise increasing debt levels further, meaning a significant flow-on impact to the local economy.
“We will see most farmers facing significant negative cashflows for much of the next 12 months leading to an increase in debt and overdraft expenses to get their businesses through another low milk price season,” he said.
“This will be the lowest milk payment farmers will get until Christmas since 2006-07.”
