Watch out NZ the dairy boom is over

Watch out NZ the dairy boom is over
West Coast dairy farmers have been hit with notification of a 20% drop in their payout this year, reflecting deepening countrywide concerns over the plummeting global price of dairy products. While Westland Milk Products may not have the benefit of market share and economies of scale of dairy giant Fonterra, its belt-tightening is indicative of the troubled times ahead for the recently booming sector reports the ODT. Having underpinned the economy for the past three years and cushioned some of the worst effects of falling house prices, dairying is now grappling with its own increasing production costs as record commodity prices have fallen back by as much as 50%-60% for some products. Westland acting chief executive Hugh Little confirmed when contacted yesterday, "We had forecast a milk-solids per-kilogram payout of $5.20-$5.60, but that has been downgraded to $4.10-$4.50 per kg - a cut of between 21%-19%. By comparison, Fonterra slashed its forecast per-kg payout by 60c to $6 in November and in mid-December cut its fair value share by almost 20%, or $1.10 from $5.57 to $4.47. While the West Coast's financial loss will run to millions, Fonterra's loss to the economy overall will count in the billions

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