Some dairy farmers have been slower to sign off-farm grazing contracts and are paying a lower price this season, which is having an effect on graziers and perpetuating the effects of the downturn in the economy, those in the industry say.
South Island Dairy Farmers Ltd dairy stock agent Charlie Baker said dairy farmers were ‘‘hanging off'' signing grazing contracts. The price last year was $30 per cow per week but this year the price had fallen to about $25 and was tipped to fall even further.
It could fall to $23 per cow per week or lower, Mr Baker said.
‘‘A lot of dairy farmers were hoping the price would drop further. A lot of people have said if they had to pay $30 they would be bankrupt,'' Mr Baker said.
Grazing charges were among a dairy farmer's biggest expenses.
Mr Baker still had a lot of grazing options available on his books.
The fact that dairy farmers were paying less for off-farm grazing and the graziers were receiving a lower price would impact on other sectors of the community, Mr Baker said.
Dairy farmers were sending more cows to processing plants this year. They were not keeping low-producing or aged cows, he said.
‘‘They [dairy farmers] are looking at every aspect of their operation,'' Mr Baker said.
The price of dairy cows had halved in recent months. This time last year good cows were selling for about $2600; now they were selling for between $1300 and $1400, Mr Baker said.
Gore-based farm adviser Andy Buchanan also said dairy farmers were slow to commit themselves to off-farm grazing contracts this year.
Dairy farmers were being extremely conservative when it came to spending money, he said.
More dairy farmers were putting in crops on their home farms to enable them to winter more cows on the home farm.
Federated Farmers Southland dairy section chairman Rod Pemberton said dairy farmers were investigating different management options including lowering their stocking rates so they could keep as many cows on home farms as possible.
Some dairy farmers were under pressure from the banks to curb spending.
However, there was some light at the end of the tunnel as Fonterra was still forecasting a payout of $5.10, not in the $4.50 range as was expected, Mr Pemberton said.
Long-time Waikaka grazier Ken Gardyne had reduced the number of cows he was taking in for winter grazing to less than half of the normal number.
He normally put in 115ha of crop, had 2500 bales of baleage and 800 bales of hay and straw on hand for winter feed in order to winter more than 2000 cows.
He said the stress and expense associated with large numbers of cows had prompted his decision to reduce numbers.
The animals pugged the soil which in turn resulted in delayed cultivation and subsequently poorer yields, Mr Gardyne said. - Margaret Phillips.