Put Payout in Perspective: Farm Finance Specialist
''Put Payout in Perspective'' – Farm Finance Specialist
While the rise in dairy payout to $4.25 is another positive sign for dairy farmers they should not see the increase as a signal to spend, warns farm finance specialist Donald Fraser.
“It is only two cents up on last month's forecast payout, and for a farm with 300 cows producing 100,000kgs/ms it amounts to only $2,000 extra,” says Fraser.
“Farmers need to keep in mind that interest rate increases could well eat that up, banks may call for a reduction in overdraft, and there is a rising trend for many other farm costs”.
Fraser points out that while Fonterra has had a great year with commodity prices up by 30%, the company’s exchange rate policy means that the payout for next season could well be softer, and the current forecast is $3.85/kgMS.
He advises cautious optimism while keeping to planned and budgeted spending as the best policy for dairy farmers.