Farm prices bear brunt of dairy downturn

The slump in dairy prices that has seen farm prices drop to their lowest level since 2012 and down a third from their peak in 2014 will be of concern to farmers, banks and our overall financial stability, Labour’s Finance spokesperson Grant Robertson says.

“Two years of below break-even pay-outs have been tough for dairy farmers, and the impact is now spreading to the value of their farms. Dairy farm prices have dropped to their lowest level since July 2012, and are down 33 per cent from their peak in October 2014.

“This situation represents real pressure in the dairy sector. At the moment prices for whole milk powder are nearly US$1000 a metric tonne below what would be break-even figure or that which is factored into the Budget.

“While the major banks have adopted a wait and see approach to the dairy decline, these numbers will be cause for concern given the nearly $40 billion of farm debt that has grown under National.

“The Reserve Bank will be looking closely again at the impact of this on New Zealand’s financial stability.

“These figures are also further evidence of the need for more urgency to diversify our economy. Labour in government would invest in supporting industries to add value; promote research and development, including through tax credits; and support strong regional development programmes.

“New Zealand simply cannot sit by, as National is, and hope for the market to give our economy a boost. Labour will be an active partner with business and workers to create decent work and opportunities right across New Zealand,” Grant Robertson said.