Cost-cutting by a South Island dairy co-operative is being seen as more bad news for New Zealand's dairy sector and the economy.
Redundancies at Westland Milk Products are on the cards as the company tries to reduce costs.
Professor Jacqueline Rowarth from Waikato University says such exercises often don't end up saving money.
"When people go, they get packages, which means you don't save money in the first year, and often we see people rehired on contracts which might be at a better rate than before."
Westland Milk Products says it is being hurt by the removal of the European Union milk quotas and softer demand from key markets.
"The contractors who do drilling and sowing and silage making, they're suffering," she says. "Everyone in dairy at the moment is suffering."
Professor Rowarth says the ripples of the dairy downturn will eventually reach urban centres.
"The ripples are going to hit the urban environment, just as they are now being experienced in the smaller towns in the rural environment. This is major for the whole economy."
An unspecified number of jobs will be axed as Westland Milk Products struggles to cope with the removal of the European Union milk quotas and softer demand from key markets.
Professor Rowarth says dairy has taken in $3 billion less this year compared with last year.