The New Zealand dairy industry giant Fonterra on Friday slashed its forecast payout to farmers for this season.
The payout for the year to May 2009 has been cut by 60 cents to 6 NZ dollars a kilogram of milk solids.
Fonterra cited a drop of 24 percent in international dairy commodity prices in the past eight weeks as a contributing factor, and warned that world prices would remain weak.
Fonterra Chairman Henry van der Heyden said declining prices across all commodities, including dairy, have been exacerbated in recent weeks by the global financial crisis.
He said the revised forecast payout has been brought forward sofarmers could budget accordingly. Given current conditions, demand was unlikely to recover by mid-2009 as initially expected.
Fonterra chief executive Andrew Ferrier said the situation has also been made worse as a build-up of world stock levels and a rebalancing of the market is unlikely in the short term.
Rural services and supplies companies said they expect farmers to continue cutting their spending.
Source:Xinhua
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