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English admits dairy in ‘severe scenario’

Bill English has admitted the dairy industry is in the Reserve Bank’s severe scenario which could lead to almost half of dairy farmers defaulting on their loans, says Labour’s Finance spokesperson Grant Robertson.

 

“On Morning Report Bill English said the dairy industry is in an extreme or severe scenario, following the fall in Fonterra’s payout to below $4. In the Reserve Bank’s modelling that could lead to 44 per cent of farmers defaulting on their loans. That’s 5,000 farmers and a huge flow-on effect to their communities.

“Even established farming families are going to the wall. Commentators are now describing this as toxic debt.

“Bill English is acting like a bewildered bystander with no idea what to do. He has to take responsibility for downplaying the risk from the global milk glut for two years.

“Mr English says loan defaults will be up to the banks and industry to handle. That’s not good enough. If 44 per cent of farmers default, banks will have no choice but to foreclose. Many of those farms could be sold overseas.

“It is likely the dairy problems will flow through to the rest of the economy with business confidence set to take a hit. The time for standing by is over.  

“The Government must be an active partner in supporting farmers and the communities around them to get through the tough times and build a sustainable regional economy.

“For too long National has misled New Zealanders on the extent of problems in the dairy sector. It’s time to take some responsibility,” says Grant Robertson.