For longtime Taieri dairy farmer Mark Butson, it was business as usual on the farm yesterday.
Mr Butson was unfazed by Fonterra's latest forecast milk price of $5.30 for the 2014-15 season, a 70c reduction on its previous forecast.
''We had a good year last year. That doesn't really worry me that much,'' he said.
Fonterra yesterday confirmed a final cash payout of $8.50 for the 2013-14 season, the highest in the co-operative's history, after what Mr Butson described as a ''bloody outstanding'' year.
The drop from $8.40 in the farm-gate milk price (last season's payout included a 10c dividend) to $5.30 implied a drop in revenues for the dairy sector nationally of about $5.4 billion.
DairyNZ calculations showed the loss of income to Otago dairy farmers from a $6 to a $5.30 milk price would be $56.1 million, while Southland farmers faced a $132.4 million loss.
When it came to the reduction in the forecast, Mr Butson, who admitted to have been farming for ''quite a few years'', including the past 25 on the Taieri, said he had ''seen it all before''.
''We've got through before; it'll be fine. We knew it's been coming for a long time. It's not a shock,'' he said.
Cuts had already been made to spending and there would be no major development done in the meantime. It was a matter of ''tighten down and do your basics and go from there'', he said.
Low forecast payouts had been announced before and somehow prices had increased throughout the season, he said.
Mr Butson, who milks about 650 cows, said he did not ''get hung up too much on politics and looking into crystal balls''.
''I just accept the price on the day and get on with the job.''
Fellow Taieri farmer Mike Lord said it was a cyclical industry and farmers took ''the ups and the downs''.
''We just take it as it comes.''
Federated Farmers dairy chairman Andrew Hoggard said losing 70c was ''really going to hurt''.
Farm working expenses this season, before depreciation and interest payments, were expected to be about $4kg/ms. Feed, fertiliser and repairs and maintenance would be cut back and farmers would ''only do what needs to be done''.
''What we know from DairyNZ is that two-thirds of dairy farms have working expenses of between $3.25kg/ms and $4.75kg/ms.
''Of course, when you start paying back the bank manager, the average cash costs on-farm head up to $5.40kg/ms.
''As you can tell from what the forecast currently is, the current surplus is a wafer-thin 15c to 25c kg/ms.
''Expressed as retail milk, that's about 1.25c to 2c a litre this season. It means that upwards of a quarter of our guys will be making a loss this season,'' Mr Hoggard said.
Federated Farmers' advice was to watch costs and to keep banks, farm consultants, accountants and families ''fully in the loop''.
ANZ rural economist Con Williams said there was no simple answer to the question of at what milk price financial stress in the sector started to increase.
But with rises in interest rates, the bank reckoned a material increase in financial stress could be triggered as the milk payout dropped from the high to low $5kg/ms.
''That said, this only starts to show up in the 2015-16 season if another low milk price and opening advance eventuates ... so an improvement in international prices and/or a materially lower New Zealand dollar are key.''
Additionally, the lower milk price had been signalled early enough in the season for some belt-tightening to occur.
Maintenance and capital expenditure was fairly up to date on most farms and high deferred payments from 2013-14 should ensure there was plenty of cash in bank balances, although that would depend on what those payments had been committed to, he said.
