Wednesday, 13 April 2016 12:55

Dairy district faces the payout squeeze

Written by  Peter Burke
Tararua District mayor Roly Ellis. Tararua District mayor Roly Ellis.

The mayor of a district where dairying is a big part of the local economy says he's starting to see problems resulting from the downturn.

Roly Ellis is mayor of the Tararua District with four major rural towns: Dannevirke in the north, and Woodville, Pahiatua and Eketahuna in the south. Fonterra has a large factory at Pahiatua. Tararua District towns also have farming related businesses such as agricultural machinery.

Ellis says the area's 350-odd dairy farms account for much of the money circulating in Tararua, including the farms' cashflows and those of the businesses that service the farms.

But the downturn has changed this, he says. While the district is not big in the national scheme of things – about 3% of NZ's cows graze the region versus 34% in Waikato -- towns such as Dannevirke are dairy dependent.

"Dairy farmers aren't spending huge amounts in shops or the agricultural service businesses. I walk the towns about every three months to find out what's going on and talk to the shopkeepers and agri service businesses. I have been a farmer myself and was a rural drought coordinator here between 2007 and 2010 and I'm a trustee of a big farming enterprise so I keep my ear very much to the ground."

Ellis has not so far heard of any dairy farmers forced to sell up but he and his council are closely watching what's happening. His biggest worry is the predicament of sharemilkers, especially lower order ones. They are vulnerable and it's with them that some of the problems are now showing up.

"What has happened all over the world -- and I have seen this in Britain where I have farmed -- is that you go through the highs and lows and when you get highs everyone gets wonderful ideas about what it's going to be.

"In fact the dairy farmers haven't had a check like this for years and years and they have suddenly realised they now have to become more efficient. Efficiencies are going to come in, I am absolutely sure of that. People who have been spending liberally until now are suddenly facing this check in what they can do."

Ellis says this has happened in the sheep and beef sector and farmers now better understand where the dollar has to be spent. It hurts like hell but farmers then go on to look at different ways of running their businesses.

More like this

Farmers get the lot

Fonterra has for the first time passed all its forecast milk price rise to its cash-strapped farmer suppliers.

Fonterra increases forecast

Fonterra Cooperative Group Ltd increased its 2016/17 forecast farmgate milk price by 50 cents to $5.25/kgMS.

GDT signals super start to spring

“A super start to spring” is how Rabobank dairy analyst Emma Higgins describes the third consecutive significant rise on the Global Dairy Trade (GDT) event platform.

GDT up 7.7%

Global Dairy Trade Event 171 concluded overnight with the GDT price index up 7.7%

Featured

Water reforms come at a cost

The government’s new freshwater laws, signed off this week, have the potential to create significant unnecessary costs for ratepayers, farmers and entire communities, Federated Farmers says.

2020 harvest yields up

Final harvest data for wheat, barley and oats (milling/malting and feed) in 2020 show yields were up 17% overall across the six crops.

 

Difficult but the right call

DairyNZ chief executive Dr Tim Mackle says the joint decision three years ago to eradicate Mycoplamsa bovis was a difficult call.

Milking cluster milks runner-up award

DeLaval has come away with the runner up prize in this year’s Fieldays Online innovation competition with a new milking cluster that eliminates the need for conventional liner changes.

Glow worms to cows

Thomas Lundman's work focus has gone from tracking tiny critters in pitch black caves to looking after considerably larger animals in paddocks near Whakatane.

» Latest Print Issues Online

Milking It

A ticking timebomb?

There could be another dairy health scare brewing in China and this one starts in our backyard.

Please explain

Does anyone in the Government understand the essential role St John Ambulance has in our society?

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter