Fonterra's decision to drop its milk payout forecast for the 2011-12 season by 45c is no reason to panic, Federated Farmers says.
Last week, the dairy co-operative announced a revised payout forecast of $6.70-$6.80, comprising a lower farm-gate milk price of $6.30/kg milk solids, down from $6.75.
While the decision was unfortunate, the rural lobby organisation thanked Fonterra for being upfront about the situation and giving its farmers plenty of warning, national dairy chairman Willy Leferink said.
"Farmers were told a couple of weeks ago to expect a downgrade in the payout forecast due to weakened global commodity price trends at the moment.
"While it is a blow for dairy farmers, they have seen this happen before and will be prepared to weather any economic turbulence.
"As well as being warned by Fonterra, they will have been watching the strong New Zealand dollar and the lower results on the globalDairyTrade auction and will have adjusted their spending accordingly," Mr Leferink said.
The good news was the longer-term outlook for dairy remained strong and Fonterra's profit forecasts for this year remained safe, he said.
Federated Farmers Otago dairy chairman David Wilson had expected the announcement because of the softening of commodity prices.
It was the reality of the current trading situation around the world and "things are just a little bit more subdued than they were", he said.