New Zealand Labour Party

Milk payout drop: Govt must take action on economy

National must take urgent action to diversify the economy after Fonterra slashed its forecast milk solids payout in a move that will cost farmers tens of thousands of dollars this year, says Labour’s Finance spokesperson Grant Robertson.

“The sudden drop in forecast milk solids payout from $4.60 to $4.15 is terrible news for farmers and the regions they support. 

“Federated Farmers Dairy Chair Andrew Hoggard said the fall could cost farmers over $50,000 on average and that ‘we could be looking at a third season of low prices’.

“With receiverships already happening, many farmers will be under more and more pressure.

“The drop comes a day after Fitch ratings agency revised our near term growth prospects downward because of declining prices for dairy exports and on the same day the Reserve Bank said dairy prices remain a risk.

“The Reserve Bank Governor can’t fix the economy on his own. He’s stuck between the rock of low inflation and falling growth and the hard place of the Auckland housing market.

“Yesterday’s Auckland-focussed announcements on infrastructure spending won’t be well received in regions that are mostly reliant on dairy farmers succeeding.

“New Zealand needs a more diversified economy to help insulate us from major commodity shocks. We need to invest in job-rich industries and support companies to move up the value chain. We can also bring forward projects to stimulate the economy. Despite more than a year of warnings as dairy prices have plummeted there has been no real effort from the Government to do this.

“This year looks like one of the most volatile since 2008. National can’t sit on its hands and do nothing,” says Grant Robertson.