16 Dec 2015

Dairy prices rise slightly but farmers still struggling

1:32 pm on 16 December 2015

International dairy prices have held in the overnight global dairy trade auction, but they are not finishing the year on a high.

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Photo: 123rf.com

Whole milk powder - the key commodity which underpins Fonterra's farm gate milk price - rose almost 2 percent to $US2304 a tonne in the latest GlobalDairyTrade auction overnight.

But that price remained a long way from the benchmark $3000 a tonne mark, which many farmers needed to break even.

Last week Fonterra held its forecast milk payout at $NZ4.60 a kilogram of milk solids.

The overall price index on the auction lifted by 2 percent to $2458 a tonne.

Most other products - including butter, lactose and cheese - rose in price.

A North Canterbury dairy farmer, Cameron Henderson, - facing a loss of hundreds of thousands of dollars - said the latest lift in prices made him optimistic about next year.

Mr Henderson said after a difficult year, the next 12 months looked brighter.

"Exceptionally tough, I think, to have seen two of the worst payouts in recent memory coinciding with two of the worst droughts in recent memory. But given that we are seeing a continued rise in GDT (GlobalDairyTrade), that most farmers believe this is the bottom and there is some light at the end of the tunnel," he said.

Mr Henderson cut his herd by 100 cows to 600 so he could cope with the drop in available feed.

Manawatu District mayor Margaret Kouvelis said most businesses have survived this year but the impact of low dairy prices on small rural towns will be severe next year.

"They shut their wallets and that's it, they're not buying farm machinery, they're not buying new cars, they're not buying anything new for their homes. It's the hunker down and survival."

Mrs Kouvelis said businesses were looking at innovative ways to stay open.