Buoyant beef market helping

High beef prices are providing some relief for Northland farmers.

A buoyant beef market is providing some slight relief to Northland dairy farmers already struggling with low milk prices.

Dairy giant Fonterra has announced an opening forecast farmgate milk price of $4.25 per kg of milk solids for next season - an increase of 35c on this year's forecast.

A high New Zealand and US exchange rate, oversupply of milk and the economic outlook of major dairy importers all contributed to a lower-than-expected forecast payout for the 2016/17 season.

Federated Farmers said since many farmers were hopeful of a price in the vicinity of $4.50, repairs and maintenance would again have to be deferred in order to reduce costs.

A payout of $4.25 for next season would bring $385.5 million into the Northland economy while this year's forecast payment of $3.90 would rake in $351 million.

The DairyNZ economic survey shows that in the 2014/15 season, average farm working expenses were $4.07kg/MS, and the break-even price was $5.77.

John Blackwell, Federated Farmers president in Northland, said this was the fourth year dairy farms in Northland had been running at a loss which put huge pressure on farmers and their staff.

"Some farmers do have low costs but they are in the minority. Some will have to get out of the industry," he said.

Mr Blackwell said Northland dairy cows were currently worth less than beef cows.

"It's fortunate that the dairy slump coincides with a buoyant beef market, although it's not a huge advantage. Beef accounts for less than 20 per cent of their income."

A dairy cow is fetching $1200 or less while a beef cow earns farmers between $1400 and $1600.

Fonterra also announced it would bring forward this year's milk payment, which should provide assistance with on-farm cashflows.

Chairman John Wilson said the company expected global dairy prices to gradually improve over the season as global production was reduced.

There is no change to the current 2015/16 season forecast farmgate milk price of $3.90 per kg of milk solids.