Farmers were trudging around a little deeper in the mud today after a fall in Fonterra's expected payout to dairy farmers.

Fonterra has drastically cut its forecast Farmgate Milk Price, with the midpoint falling from eight-dollars-per-kilogram of milk solids to just seven-dollars.

It's blaming reduced demand for whole milk powder from China.

Federated Farmers Dairy Chair Richard McIntyre told Heather du Plessis-Allan that it’s a challenging time for farmers.

He says they've got high interest rates, high input costs, and now a milk price well below the breakeven price.

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