“Cash is king for farmers because of seasonal conditions, demands for debt repayment from the banks and the rising tide of on-farm costs,” he said.
The forecast of the fourth $6-plus season in a row is welcome but farm working expenses have gone up 50c a kilogram of milksolids over the past couple of years and margins are tight.
“Tradesmen are charging up to $100 an hour plus travel time and mileage, rates and insurances have risen considerably and labour costs are going up.”
Lewis also mentioned the wall of potential regulations looming and the risk of increased interest rates because the banks expect the Reserve Bank to introduce tougher requirements.
“That is why we need Fonterra to have a strong balance sheet and make higher advance rates – farmers were expecting something closer to $5 than $3.80.”
