Fonterra has made two record breaking announcements in quick succession, lifting both this year’s payout and the forecast for next season.

The dairy giant announced on Tuesday the current season’s payout was lifted, rising to a record breaking $8.00 - $8.10.

On top of this, an opening payout range between $7.15 and $7.25 was forecast for the new season – also a record.

Federated Farmers Dairy Spokesperson Lachlan MacKenzie says the opening forecast is well above what most had expected.

"The good news is that the forecast for next year gives us stability.

“It’s down 80 odd cents on what’s going to be paid out this year, but that just reinforces the volatility in our dairy industry.”

Lachlan MacKenzie says the 10c lift in the current season’s payout will also please critics of the current tax system.

"We’ve had a good milk production season, it gives us confidence, and there’ll be a smile on the face of the Inland Revenue Minister, just because of the extra money that’s going to be coming in.

 “There’ll be well over 300 million dollars of extra tax coming in this year, the comments we’ve seen recently that farmers don’t pay tax are basically false.”

Both economists and industry analysts are now turning their attention to where the extra money will be spent, with many predicting farmers will want to pay down high debt levels.

Lincoln University Farm Management Professor, Keith Woodford, says up to half of dairy farmers will be facing pressure from their banks to reduce that dependence on debt.

“I think about half the farmers are under significant pressure to keep paying that money to the banks to pay down debt.

“These good payouts are excellent for farmers, but also within the banks there would have been some people heaving fairly big sighs of relief as to how it’s turned out.”

Economist Bernard Hickey says in a year of high payout, the tax take from farmers will also increase.

“A lot of farmers previously have kept high debt levels in order to avoid paying tax.

“Even with the high payout, some farmers might use the extra money to build buildings or buy extra fertiliser instead of giving it to the tax man, but we’ll see.

“There will certainly be more tax paid than those figures we’ve been seeing recently, but there is a systemic problem in the farming sector with not paying tax.”

It’s expected the forecast for next season will give employers an added confidence boost, as NZ Institute of  Economic Research statistics predict, more than four thousand jobs will be created as a result of the numbers.

And with the country’s largest farming show taking place in Hamilton next month, National Fielddays organiser Warwick Roberts says the announcement should be great news for the event.

“As far as the Fieldays are concerned, at least I will be happy for the exhibitors because they will all do better than they did last year, perhaps some of the larger ticket items might need replacing.

“And now the farmers can say ‘I’ve got a little bit more money to do it.’

“It’ll be lovely to see their smiling faces come through the gate!”