Dairy price fall effects everyone

Homepaddock

The fall-out from falling dairy prices isn’t confined to farmers:

. . .there are 7 billion reasons it will affect all of us. Seven billion dollars is the amount that is set to be wiped from the New Zealand economy this year.

Fonterra is forecasting a total payout to farmers this season of $4.70 to $4.80 per kilogram of milk solids ($4.50 forecast payout plus a likely dividend of 20 to 30 cents per share). That compares to last year’s record payout of $8.50 ($8.40 payout plus a cash dividend of 10 cents per share).

The average break-even point for farmers this year is $5.40, after you factor in both the cost of running the farm and the debt interest payments.

It is the reason farmers are cutting costs. That will be felt in towns and cities across New Zealand, from shops in rural towns to cities where…

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