Predictions of a rise in prices at this morning's global dairy auction have proved incorrect.
Prices fell 2.9 percent overall, with whole milk powder prices down 0.8 percent.
It is more bad news for farmers who are facing the prospect of a second season in which most will fail to break even.
Total dairy debt stands at around $38 billion. Ten percent of the farmers hold about 30 percent of the debt. Dairy New Zealand says that is around $10 million on average for each of those farms.
The Reserve Bank has been running stress tests on the banks to see how they would cope if prices stay low for another couple of years and farmers default on their loans
The RBNZ says the losses would be manageable for the banks.
But it would mean some farmers would lose their land.
