A drop in the forecast milk price that will slash $31.5 million from their earnings is the worst possible start to the festive season for Northland dairy farmers.
Dairy market volatility prompted Fonterra to announce a decrease in its forecast payout for the 2017/18 season by 35 cents to $6.40 per kilogram of milk solids. The dairy giant had earlier announced a forecast price of $6.75 per kgMS.
Despite demand for dairy remaining strong, particularly in China and other parts of Asia and Latin America, Fonterra said strong production in Europe and continued high levels of EU intervention and stockpiles of skim milk powder has lowered prices.
Northland dairy farmers supply 90 million kg of milk solids each year to Fonterra.
They say a drop of 35 cents will hit them hard.
Northland Rural Support Trust co-ordinator Julie Jonker said the recent fall in global dairy milk prices came on the back of decent payouts in the last couple of years.