Dairy farmers are delaying committing to winter grazing contracts with many taking the view graziers were asking too much.
Southland consultant Ivan Lines urged both parties to take a longer-term view, to develop long-lasting business relationships and to ensure both parties were treated fairly.
Mr Lines said contracts were later in being signed as parties waited for the market to find itself.
He said if the price was too low, there could be a shortage of grazing next year but, equally, dairy farmers were finding their cash flows were tight, with many budgeting on breaking even this year.
Mr Lines said initial budgets were based on a payout of $7 a kg of milk solids (kg/ms) and some had brought forward capital expenditure based on that forecast milk price.
With Fonterra now forecasting a payout of $5.10, costs were being cut and budgets reviewed.
"Cash flows are extremely tight and cash flows next year will be extremely tight."
He was preparing budgets for next year on a payout of between $4.80kg/ms and $5kg/ms.
It appears winter grazing contract prices were falling below last year, which, in some cases, reached $34 a week.
Early-season agreements last year were between $22 and $24 a week and contracts signed close to winter were between $30 and $34.
Sources have revealed that, depending on the stock management agreement, grazing prices for this year ranged from $25 to $28 a week.
Mr Lines said graziers' expectations for this winter were heightened by the high prices paid last winter, but that was not reflected in the market which was now rebalancing.
"There were cheap crops that went in and they were paid very, very well for the grower. Growers made good money last year and they want to make good money this year but it is balancing out."
Part of the dispute stems from the cost of planting crops which coincided with fertiliser reaching record levels.
Mr Lines said given tighter budgets, dairy farmers were looking for grazing closer to their farms and that was possible because there was much more available.
Last year, dairy farmers had to take what they could get but this year he estimated he had available grazing for another 5000 cows.
"There is no shortage of grazing. There are oceans of it."
Federated Farmers Southland dairy section chairman Rod Pemberton said he had heard of contracts signed at $28 a week and one at $32 a week, but admitted dairy farmers were resisting paying high rates.
Those contracts were agreed before Fonterra cut the milk payout to $5.10 kg/ms, he said.
Grazing for young stock was also about 20% higher than last year.
He could understand graziers seeking to maximise their income from wintering cows, but said winter grazing was a significant annual cost for dairy farmers and $32 a week was not realistic.
In his case, winter grazing was a larger expense than fertiliser.
Mr Pemberton said he had heard of farmers drying off early to leave more pasture cover so they could take more cows through the winter on their own farm, while others were looking at other wintering options such as herd homes.
In the North Island, dairy farmers were walking away from maize silage contracts because of the cost, but Mr Pemberton urged parties to sit down and talk about cow wintering.
"They have to negotiate because dairy farmers need the feed and graziers have put in the feed with the expectation they will have cows coming in."
Mr Pemberton said his case showed how the situation for dairy farmers had changed.
He owns a wintering block in Central Otago and said with a grazing charge of $28 a week it would make money, but his dairy farm this year was expected to lose money.