Sure John, nobody?s panicking. But the dairy slump?s hit main street

Farmers are keeping their wallets shut as they face at least a year or two of tough conditions.

They?re fighting to stay on their farms, but in the towns, the lack of money is going to kick start unemployment.

Retailers in Taranaki say the downturn in the dairy market is starting to hit turnover, with sales declining by between 10 and 20 percent.

Fonterra has slashed its forecast payout for the season to $3.85 a kilo of milk solids – far below the break-even point for many farmers, whose spending on non-essential items has all but evaporated.

Michael Eager, who owns the R J Eager furniture stores in New Plymouth and Stratford, said it was taking longer to shift stock.

“We are already seeing a slowdown in retail sales. Enquiries have dropped away so it is impacting at the present time quite strongly and particularly in the small towns.

“We have a business in Stratford, and we’re seeing that impact take place now.” ?

Mr Eager said farmers were simply not out shopping.

“They’re just not coming in, they’re just not out there, they’re not shopping, they’re not looking for things. They’re certainly not shopping at all, they are not even coming into the stores.”

Mr Eager said his sales were down between 15 and 20 percent and he expected them to drop further.

Retailers would have to tighten their belts along with farmers, he said.

“We’re just going to have to think smarter, we’re going to have to watch our overheads and we’re going to have to keep all our staff working on minimum hours and we’re just going to have to watch everything we do.

“Hopefully we can ride things out, that’s what we’ll be doing. We’ll just batten down the hatches and just go from day to day really.”

Unfortunately I don’t think things are going to improve anytime soon.

The Chinese were stockpiling milk powder and at the same time Fonterra is sharing expertise and building additional capacity.

The prices are low and getting lower because supply exceeds demand..it is basic economics…and yet we are helping our customers work out how to supply themselves…lowering the price at the same time.

That of course has bugger all to do with the government, but it is the government who will get the blame.

 

– Radio NZ

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