Wednesday, 13 May 2015 09:59

More financial pain

Written by 
Head of Federated Farmers dairy section Andrew Hoggard Head of Federated Farmers dairy section Andrew Hoggard

The financial pain for dairy farmers will hit home early in the coming season, according to the head of Federated Farmers dairy section Andrew Hoggard.

He told Dairy News it’s going to be a challenging season, likely extending well beyond this time next year because retrospective payments will be low. He says many dairy farmers will never have experienced a situation where the payout has gone from such a high to a massive low.

DairyNZ’s forecasts that most dairy farmers will be in overdraft for all next season and beyond resonates with his own situation, he says.

“For next season we had done our budgets on the basis of a $4.70 payout and based on that we were able to get through next season budgeting on what we guessed was a $5.50 final payout. That got us through without any borrowing, having looked at various things to cut and at management strategies for how we were going to change things. But when we did the budget after they took 20 cents off the payout, that effectively meant for us $57,000 out of the budget in the coming spring and added a lot more complexity to it. Obviously we will need to get short term borrowing or look at other options for reducing costs. It changes things for us and it makes next season even more challenging than it already was.”

Hoggard says at the start of the current season farmers received some large retrospective payments which helped their balance sheets. But this won’t happen later this year and that’s when the pain will hit. He says a lot of people believe things might come right towards the end of the new season, but he says the market is so volatile that anything could change overnight.

Many farmers new to the industry haven’t experienced sustained financial problems like those that exist at present, he says.

He recalls that as a young single sharemilker he lived on baked beans and worked hard when the payout was at a low of $2.70. But now he has a young family whose expectations are not geared to the tough times ahead.

More like this

Dairy power

OPINION: The good times felt across the dairy sector weren't lost at last week's Beef + Lamb NZ annual meeting.

Another win

OPINION: Feds Southland 'pres' Jason Herrick and colleagues who continue the good fight against bureaucratic madness on behalf of farmers, have had another win - for now, at least - getting a court decision granting a 'stay' on rules in the Southland Water and Land Plan until changes can be made to section 70 of the RMA by central goverment, somtheing they clearly signaled after the election.

Featured

Farmers will adapt amid global trade turmoil

New tariffs imposed by President Donald Trump signal an uncertain future, but New Zealand farmers know how to adapt to changing conditions, says Auriga Martin, chief executive of Farm Focus.

National

Machinery & Products

Amazone extends hoe range

With many European manufacturers releasing mechanical weeding systems to counter the backlash around the use and possible banning of agrochemicals,…

Gong for NH dealers

New Holland dealers from around Australia and New Zealand came together last month for the Dealer of the Year Awards,…

A true Kiwi ingenuity

The King Cobra raingun continues to have a huge following in the New Zealand market and is also exported to…

» Latest Print Issues Online

Milking It

Dairy power

OPINION: The good times felt across the dairy sector weren't lost at last week's Beef + Lamb NZ annual meeting.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter