Farmers urged not to panic over dairy prices

  • 09/08/2015
Fonterra truck (Photo: Facebook)
Fonterra truck (Photo: Facebook)

Federated Farmers president William Rolleston says there isn't a crisis in the dairy sector but Labour leader Andrew Little says there is.

Fonterra, the world's largest dairy exporter, slashed its farm-gate milk price for this season on Friday by $1.40 to $3.85 per kilogram of milk solids.

That will leave few farmers able to make a profit, and Dairy NZ estimates that $5.70/kgMS is the industry average break-even point.

Dr Rolleston told TV One's Q+A programme on Sunday that low dairy prices are a worldwide phenomenon and the farm lobby group doesn't think the situation is at crisis point.

"I think the most important thing is to have cool heads at this time," he said.

"It'll be a crisis if people start panicking and I don't see that happening. I see the banks actually working very well with farmers."

He said the way to respond to low prices was to cut production, and urged the government to reduce the regulatory burden on farmers and invest in science and technology.

But Labour's Mr Little is making dire predictions about how long it'll take dairy prices to recover.

"There is a crisis in dairy, and a combination of the farmers, the banks, the government need to get together to get the farmers through it," he said.

"Who knows when there's going to be a material recovery in that price? I don't see it happening in the next year or two, a significant recovery.

"So we do have some tough times ahead of us. And remember, it's not just the farmers. It's the communities they're in, too."

Meanwhile, NZ First leader Winston Peters told Q+A the dairy payout forecast was going to get worse and people were in denial about this.

He said the forecast could go as low as $3.50/kgMS and the consequences of this would be terrible.

Fonterra has announced a $430 million support package for farmers, in the form of an interest-free loan of 50 cents per kgMS for production between June and December.

Fonterra chief Theo Spierings told The Nation programme on Saturday that the situation was serious and the low milk price was not sustainable.

NZN