The Fonterra payout of $4.15/kg MS has created enormous pressure on dairy farms. Dairy farmer Lyn Webster leases a dairy farm in Kaitaia and is struggling.

More dairy farmers are looking to shut the family farm gate, some after generations on the land, as the milk price slump pushes rural households to breaking point.

A DairyNZ and AgFirst report on farm ownership pathways out in April is expected to show farm ownership stretching further out of reach of many as growing numbers look for a managed exit from an increasingly unprofitable and stressful industry.

The looming dairy exodus has prompted a warning that some of the country's best and brightest will be lost to a sector once considered the backbone of the New Zealand economy.

CHRISTEL YARDLEY Lyn Webster says many talented and hard-working people could soon be forced out of the dairy industry.

Farmer Lyn Webster is regarded as the poster girl for frugal farming, but even she is at risk of going under in the dairy payout storm.

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"I love what I do and I'm proud to be a dairy farmer but unfortunately for people like myself, working a low-stock farm, we'll probably be the first to go in this crisis," Webster said.

CHRISTEL YARDLEY Greg Yuretich has been a dairy farmer for 30 years but is looking to diversify his farming operation.

Earlier this month Fonterra slashed its milk price forecast to $4.15/kg milk solids from a previous forecast of $4.60/kg. The break-even point for most farmers is about $5.40/kgMS.

Waikato dairy farmers with staff will also be facing tough decisions over the next few months as they look ahead to another challenging season with little prospect of a lift in the milk price.

Waikato Federated Farmers president Chris Lewis said farmers needed to consider whether to keep employing staff - from managers to sharemilkers and contract milkers - or bail out of the industry altogether.

He believed many older farm owners, faced with the prospect of tighter environmental regulations and uncertainty over the milk price, might look to exit dairy farming.

"Farmers have come to the realisation of what this season and next season will look like and they are planning away," Lewis said.

"Some may have that kneejerk reaction now, most will be thinking in their mind how can we save this nest egg so we can have a comfortable retirement."

So far there had been few forced exits from farm owners within Waikato, but Lewis would not be surprised if there was an influx of sales as the end of the season approaches.

Northland man Greg Yuretich has been a dairy farmer for three decades and experienced the highs and lows of the industry.

The tough times, however, were becoming more frequent and prompted him to devise a five to 10 year plan to exit dairy farming.

He was looking to beef farming and bee hives as a way of diversifying his income.

"My family has farmed this land for 60 years and over time amalgamated three farms into one. But with this milk price you do ask yourself 'Why am I getting up in the morning?' My staff still get paid but I'm not getting anything."

Webster, who leases farmland south-west of Kaitaia, said the next few months could decide her farming future and expected many smaller farms would be the first to fold.

The advice to farmers was to cut their costs but that in itself wasn't a long-term solution to coping with a tumbling milk price, she said.

"During these hard time there's no doubt people will fall through the cracks," she said.

"I've been doing this for 14 years and for me it's probably too late to try and get out. But if I go under it's not like I'll lose the family farm that's been in the family for generations. Imagine how you'd feel if that was you.

"It's just a shame that so many hardworking and talented people might be lost to farming."

The dairy downturn also means farmers are increasingly at the mercy of banks with a new Federated Farmers poll showing about one in 10 dairy farmers under pressure from banks over their mortgage.

PGG Wrightson Real Estate general manager Peter Newbold said farmers were most likely holding off to see where the market was heading before making a decision to sell up.

While there was no clear trend of farmers putting their farm on the market due to the dairy downturn, Newbold said there had been more farmers enquiring about selling.

There were more conversations going on about potentially listing and he expected more farms to be put on the market in autumn.

John Fegan, from Cambridge-based farm recruitment firm Fegan and Co, didn't expect huge numbers of farm owners or 50:50 sharemilkers to opt out of the industry because it would mean having to sell their herd at a time of low cow prices.

Many farm employees were staying on with their current jobs into next season rather than risk moving to a new farm.

"Part of that rational is it's the devil you know rather than taking a risk on the market and not finding a better role," he said.

He had yet to see many forced exits from farm owners or sharemilkers.

"It will probably be from now on that we'll start to hear about those."