Fonterra’s latest cut to its forecast farmgate payout confirms that an economic black hole of $7 billion is opening up that will seriously affect the regions, says Labour’s Finance spokesperson Grant Robertson.
“The cut confirms the long term trend of a fall in global milk prices due to an upcoming international supply glut set to last five years. With global milk prices slashed in half since the February 2014 peak, there is little doubt the forecast cash payout will fall too.
“If the international milk price keeps falling or even stays where it is, Fonterra’s payout will be significantly lower than forecast and the economic black hole that currently stands at $7 billion will be even bigger.
“This will have a serious effect on farmers and the many provincial communities that are almost solely reliant on them for their economic wellbeing.
“The Government has repeatedly refused calls to help diversify our industries and export markets so that the country and local communities are not hit hard when a commodity price falls.
“It has even ignored the Reserve Bank Governor’s warnings of the risks to the economy from Auckland’s housing bubble and the damage the associated high dollar is causing to exporters.
“National has created an economy of milk and speculating on houses and pretended that it will continue to flourish. But the cracks are showing.
“New Zealand needs a modern, diverse economy that creates well-paying jobs across all industries,” Grant Robertson says.