New Zealand Labour Party

Economy and jobs under threat from dairy price wipe out

Milk prices hitting an all time low in the latest dairy auction is more evidence of  the disastrous impact of the complacency of the National Government on the economy and New Zealand jobs and incomes, Labour’s Finance spokesperson Grant Robertson says.

“There has been another double-digit fall in dairy prices overnight, which are now at their lowest level since Global Dairy Trade auctions began. Prices have fallen more than 40 per cent since March and are 62 per cent lower than last year’s peak.

“Fonterra's forecast of $5.25 per kg of milk solids for the current season is based on prices heading back towards US$3500 a tonne in the coming year. At $1848 per tonne of whole milk powder, it is now closer to half that price. 

“This ninth successive fall in dairy prices is the latest in a series of bad news for the New Zealand economy, so dependent on dairy exports. Business confidence is negative, wage and consumer confidence is plummeting, unemployment remains high with fewer advertised jobs, wage growth is stagnant and overall exports continue to fall. 

“The economic signals have been clear for months now, yet the complacency of the Government has put jobs, incomes and the viability of productive New Zealand businesses at risk.

“Just a few weeks ago the Reserve Bank Governor warned of the risk that dropping dairy prices represents to our economy.  The expanding $13 billion economic black hole from this price collapse will cause significant economic damage to regions that are heavily reliant on dairy and the wider economy unless the government acts swiftly.

"Sitting on our hands and wishing it all goes away cannot be the answer.  New Zealanders deserve better than that.  Labour believes a responsible government would have made far greater efforts to build and diversify industries, invest more in our regions and in research and development.

“National squandered economic opportunities while it was riding the wave of commodity prices, now that it is crashing down, New Zealanders are paying the cost of the wipe out,” Grant Robertson says.