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Lower milk payout: What now?

Fonterra has recently dropped its forecast milk price for the 2014-15 season from $7 to $6, as international dairy prices remain under pressure. AbacusBio farm consultant Kevin Wilson said that it was a good time for dairy farmers to review their budgets.

As the drop had been signalled early enough in the season, there should be some flexibility to adjust expenditures. It was also a good time to look at on-farm systems and ''dot the i's and cross the t's'' in terms of pasture management, and using supplements strategically.

Farmers were urged to watch costs closely, re-forecast budgets, and make use of their support networks, including accountants, lawyers, and farming professionals.

Last season, dairying pumped an estimated $727 million into the Otago regional economy. Figures from DairyNZ showed the estimated drop in farmer income for Otago would be $92 million and $218 million for Southland. But it was ''not all doom and gloom'' as Federated Farmers dairy chairman Andrew Hoggard was confident the payout would progressively lift as the season unfolded.

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