The news late on Sunday that Fonterra has increased its payout by $1.10 per kilo of milksolids will come as some relief to those dairy farmers who are struggling to make ends meet.

However, the increase comes with a few riders for dairy farmers.  Fonterra noted that the global increase in milk prices may mean that other countries decide to up their milk production, thus keeping the volatility of the market for a while yet.

In Southland, where the dairy boom has has been felt both in good and bad ways, there are still a number of farms under pressure from high debt levels.

The Fonterra announcement is good for farmers and for New Zealand’s economy, but like the Government’s economic management plan, farmers will still be keeping an eye on containing costs for a while yet.