The challenge for dairy farmers will be working through their cashflow position for the coming season, DairyNZ chief executive Tim Mackle says The industry body was concerned this season's low milk price, coupled with a low retrospective payment this winter - about a third of last year's - would see many farmers ''dip into the red'' this spring.
''For many, they may not pop back up into the black for some time. Banks are telling us that many farmers will hit $1.50-$2kg/ms in overdraft this September,'' Dr Mackle said.
DairyNZ had calculated an average farmer needed $5.40 in income per kg/ms just to cover farm working expenses and interest and rent this season.
''A lot of farmers will not have a lot of leftover income to draw upon for tax and their own living expenses with the current low forecast milk price. Around a quarter will probably have to extend their debt this financial year,'' he said.
The 2015-16 season posed an even bigger challenge, when lower retrospective payments started to hit in July and August this year and many more farmers had to look at putting cost-effective measures in place to avoid escalating their debt.
Last month, DairyNZ launched its Tactics for Tight Times campaigns to help dairy farmers get through a tough season brought on by the low milk price and drought.
More than 845 people attended events and a second round begins in April.
