'No optimism' over high payouts for dairy farmers

Dairy Farmers are "resigned to the fact it's not going to be good for at least two years," Federated Farmers West Coast provincial president Peter Langford says. Photo / Christine Cornege

Challenges facing the dairy industry are taking their toll on farmers, Federated Farmers West Coast provincial president Peter Langford says.

"Farmers are pretty subdued right now. There's no optimism of a high payout coming along soon. Most are resigned to the fact it's not going to be good for at least two years -- if they can survive that long," Mr Langford, a Karamea dairy farmer, said.

"It's going to be very hard until Christmas. It won't be until after then that we will know what the dairy company is doing.

"We're price takers not price makers, so we just have to take what we get."

Mr Langford called on the Reserve Bank to act on behalf of farmers.

"The dollar is still too high, which is not helping.

"The Reserve Bank needs to drop interest rates -- like it should have done three months ago.

"They are only worried about housing in Auckland and not really thinking about the rural sector. They need to focus on both."

Mr Langford agreed with comments last week by West Coast-Tasman MP and Labour primary industry spokesman Damien O'Connor that land values, debt levels and increasing costs of production posed a serious risk to the future viability of the New Zealand dairy industry.

Dairy farmer debt on the West Coast varied quite a bit, Mr Langford said.

"There are some who are okay but others are carrying a huge amount.

"There will be quite a bit about at the moment. People will be borrowing or running into their savings over winter," he said. "I know my overdraft has lifted."

Those farmers who did not have much debt would survive with the current low dairy payout, "but it will be a subsistence life for some".

"It's down to how you farm and how fit you are. If you're running a lot of quad bikes and paying staff rather than running around and doing jobs yourself, then your costs are going to be higher."

Cutting costs where possible would benefit most farmers in the current economic climate but some seemed reluctant to take that approach, he said, adding that proper business planning was critical.

Those farmers who were struggling with their debt levels needed to communicate regularly with their bank manager, Mr Langford said.

"If a bank manager has confidence in a person's ability to farm they will support them. If the bank loses that confidence they will withdraw that support."

Mr O'Connor said it was time for the Government and the dairy industry to do more strategic planning and make some hard decisions regarding the future sustainability of a New Zealand-owned dairy industry.

"The Government and the dairy industry must work together to export higher value, sustainable products for the changing international market."

- Greymouth Star