Rural retailers wary of dairy payout cut

19:27, May 22 2012

Reaction to Fonterra's forecast payout drop was mixed among retailers in the Waikato's dairy heartland yesterday.

Waikato Toyota Te Awamutu branch manager Duncan Fraser didn't think the reduced payout would be too noticeable in Te Awamutu, as dairy farmers had been watching their pennies for the past few years anyway.

The company sold a lot of vehicles to those working in the farming sector and he said they'd noticed a reduction in business from them over the last few years due to the recession.

"This news might make them think twice if they were looking to purchase a new vehicle in the near future."

Te Awamutu Chamber of Commerce chairman David Samuels agreed.

He said money was already tight, and dairy farmers had already seen many ups and downs over the past few years.


"I suspect only foolhardy farmers would be caught out by this, " he said.

Mr Samuels said Te Awamutu did rely heavily on the dairy dollar, so any reduction in payout levels would have some impact.

"But if you walk through the centre of town it is bustling.

"There's absolutely that activity there and that has to be healthy," he said.

The South Waikato town of Putaruru is another that relies heavily on the dairy dollar.

Putaruru Electrical owner Wayne Bullot said times had been tough for several years, so he wasn't sure they'd notice any major impact on the town.

"But as a small country town we do rely on the dairy industry, so any shortfall in their income will affect the town," he said.

He wasn't too worried, as the town had just come through a major recession.

"It's nothing new.

"It just might make farmers think twice and put off buying things," Mr Bullot said.

Dairy town Matamata would feel the pinch of the reduced payout, said Farmlands Matamata manager Brian Ross.

"Everything revolves around the payout," he said.

"When it goes down farmers get a bit more careful with their money; they can really pull the reins in on their spending.

"Will it affect us?

"It really does depend on the payout, and how long this cut lasts.

"But we are just about 100 per cent reliant on dairy, so yes, it will affect us."

And it was not just his business that would be hit, Mr Ross said.

"Being a rural town, there will be a lot of businesses in Matamata who are affected by this."

It would only be a matter of time before Morrinsville's economy took a downturn as a result, said Morrinsville Business and Promotions Association's Cathy Balvert.

"Yes, we will be affected, but then again so will any rural dairy town across New Zealand.

"Anything like this will have a detrimental affect, but as for its long-term effects, well it is really too early to tell," Ms Balvert said.