It was severely tested last year when he averaged $56 for 6000 prime lambs sold and, while he has welcomed the higher returns, the Clydevale sheep and dairy farmer was conscious the better returns had little to do with action by meat companies and plenty to do with a worldwide shortage of lamb.
"The sad thing is that there has been no real change. There has been a lot of luck involved with supply and demand without any of the structural changes to the industry," the South Otago farmer said.
This year he has averaged $85 for prime lambs, while on his two dairy farms milk prices have fallen from $7.90 kg milk solids last season to a forecast $5.10 this season.
Mr Johnston, who is in partnership with his brother, Andrew, converted two Clydevale sheep farms to dairying 13 years ago and seven years ago, and said once before Fonterra had announced a sharp drop in payout.
Between 2001-02 and 2002-03 the payout fell from $5.33 kg/ms to $3.63 kg/ms.
"They said then it shouldn't happen again."
Despite that, he had long-term faith in the dairy industry and believed the payout would return to around $5.50 kg/ms.
The issue was keeping costs under control.
He feared momentum last year by sheep farmers to drive change in the meat industry had dissipated as prices had improved and the need to rationalise plants and consolidate companies would be put off until the debate was reignited by plummeting prices.
The prime lamb procurement, processing and marketing system was failing and change was needed, but just as important was the impact the boom and bust cycles were having on farmer confidence.
Last year there was little confidence among sheep farmers . That had improved, but doubt remained at how long the better prices would last, he said.
"There is still a long way to go. One year does not mean an industry is recovering."
Meat and Wool New Zealand chairman Mike Petersen also questioned how long sheep farmers could expect higher returns given the better prices were due to supply and demand rather than market development or structural change.
"Fundamentally, nothing has changed in that regard," he said.
He feared the shortage of stock, which could lead to a procurement war later in the season as companies tried to fill their plants, as a sign nothing had changed in the meat industry.
"This is not being negative about the industry. This is saying we have got a great turnaround but we still need to reorganise the industry. Those drivers have not gone away."