A farm machinery supplier expects to feel the pinch, as the slump in Fonterra's milk payout price causes farmers to close their wallets.

Farmers are expecting the lowest milk payout in seven years, after the release of a revised payout forecast.

Norwood Farm Machinery says equipment is one of the first things to take the backseat, when farmers tighten their belts.

Taranaki regional manager, Mark Sanger, expects sales to drop over the next year or so, but says it's not all doom and gloom.

"There’s usually a bit of a swing back to used machinery instead of buying brand new.

"Also we tend to find our parts and workshop side of the business gets busier because people tend to repair rather than replace."

Mr Sanger says he saw the price drop coming and had planned for sales to ease off.

He maintains it won't be too long before prices pick up again. 

He says the last four times this has happened, prices have turned around within three years.

He says these cycles used to be much longer in the 80s and 90s.

While Fonterra's hefty milk payout last year will be this year's saving grace, farmers say weathering two years of low prices will be a stretch.

Taranaki sharemilker, Charlie McCaig, says farmers are riding high on cash flows from last season, but making these stretch for two years will be difficult.

“The big purchases and the new cowsheds and things that were planned for this year are probably still going ahead. The downturn in that stuff might not be seen until after next winter.”

Mr McCaig says sharemilkers are more exposed to the volatility of a milk payout drop.

He says most don't receive dividends from Fonterra, so don't have the insulation to price changes that shareholders have.

“In the long-term, we have to be able to ride these bumps out as they happen. It’s still a good industry to be in if you’re in it for the long haul.”