Dairy cooperative Fonterra today reduced its 2023/24 season forecast milk price from $6.25 to $7.75 per kgMS, to $6 to $7.50.
That means the midpoint falls from $7 to $6.75. Westland Milk pays the midpoint, plus 10c.
It comes only two weeks after a $1 was wiped off the forecast.
On-farm costs had been coming down a little, but very slowly. However, fuel - a big input - had gone up.
"It's a real belt tightening year for everyone."
She suggested West Coast farmers think about previous years when the payout was low, and what they could do now that would not affect production for the rest of the season, and next year.
The downturn would take a while to be felt in the wider West Coast towns downstream.
"But it will."
Federated Farmers West Coast president Bede O'Connor said it would be putting more pressure on farmers at a very busy time of year.
Some may have to re-negotiate seasonal financing through the spring period, which itself could cause added stress.
"We would be hopeful that this would be the last drop.
"We are grateful that this spring has been fairly kind so far, and most farmers seem to be in an okay-to-good grass growth position."
West Coast-Tasman MP and Agriculture Minister Damien O'Connor said the drop was disappointing and he was "surprised that Fonterra have been so quick to move again".
"The downstream impact will be felt across the region and the country. Farmers will have no choice but to reduce spending, which will affect both the retail and service sectors."
Westland Milk Products said it would advise its farmer suppliers that the forecast milk price for the 2023/24 season was decreasing due to Fonterra's announcement.
Westland's milk price would remain 10c above Fonterra's forecast farmgate milk price.
Fonterra chief executive Miles Hurrell said Global Dairy Trade prices had continued to fall since it revised its farmgate milk price earlier this month, requiring the co-op to reduce its midpoint by a further 25c.
"Reduced demand from key importing regions for whole milk powder is continuing to weigh on prices. While indications are demand will start to return over the second half of FY24, we do expect the pace of demand growth to be subdued relative to initial expectations.
"In the meantime, we will continue to respond to market signals and adjust our forecast Farmgate Milk Price to ensure that the impact of current prices and currency movements is transparent," he said.
"This is a challenging time for New Zealand's dairy farmers."
