Fonterra may put dampener on Fieldays
Farmers may have to borrow money for Fieldays spending if Fonterra cuts next year's dairy payout.
Fonterra will make an announcement next Wednesday, and farmers have varying expectations. Some expect the payout to drop from $8.65kg/milksolids to as low as $6.
Jacqueline Rowarth, professor of agribusiness at the University of Waikato, said it was a big year for compliance, and farmers were having to spend to meet regional council and Fonterra standards.
She said there was very little impulse buying at Fieldays and farmers will be planning for the expected payout drop.
"There's a huge expenditure that's planned for effluent, shelters and feed pads, but that's already in the budget," she said. "You can't put off compliance."
If the payout cut is unprecedented, farmers will have to borrow money, said Rowarth. "If [payout] falls below what was budgeted for, then there will have be loans."
She said many banks offered low-interest loans for environmentally friendly investments.
Rowarth said farmers attend the Fieldays to compare different products in one place, rather than for impulse spending.
Hinuera dairy farmer Ralph Gore said the drought meant some profits had to go into feed supplements rather than debt servicing or assets, but farmers were confident.
"The majority of them are reasonably happy with life."
He said the predicted price cut may have some influence on Fieldays spending, but "I don't think that will have too big an impact".
"Most farmers are pretty astute businessmen and tend to do their sums pretty rigorously these days."
He said Fonterra's opening payout price was just a forecast that would be adjusted through the season and did not reflect the final price.
Morrinsville dairy farmer Donna Arnold said farmers were feeling good about the Fieldays.
"I think the general feeling in the dairy industry is a positive one at the moment."
Fieldays chief executive Jon Calder said even after a cut the payout would remain historically high.
"You've got to look at it in context. Over the last decade, that's holding up pretty well."
He said the other thing to consider was farmers are well-prepared and did not just live year to year.
"You've got to give our farmers some credit."
Calder said he expected this year's Fieldays, from June 11 to 14 at the Mystery Creek Events Centre near Hamilton, to be successful, based on the fact sites sold out in December, and ticket sales are double where they were at this time last year.
"We're still reasonably optimistic."
Exhibitors say Fieldays sales would go well, despite the expected payout cut.
"It's offset by the confidence in the economy at the moment," said Coresteel director John Morrow.
He said last year's Fieldays exhibit generated inquiries and work for the company. "I believe we will do better than last year."
Ross Nesdale, national marketing manager for tractor and machinery chain Power Farming, said Fieldays was a marketing exercise, and sales were not the only focus of the show.
"We don't go along there necessarily expecting them to spend a lot of money."
He said the important thing was getting a large number of people to come through the stand.
"We expect the numbers to be just as good as they have been in the past."