is a real possibility that 25 percent of dairy farms could fail if
the milk price doesn't rise soon, an agriculture consultant says.
Radio NZ, 14 March, 2016 Prime
Minister John Key is being accused of downplaying the possible impact
of the crisis in the dairy industry, which saw a price forecast below
the $4 mark per kilogram last week.
says 25 percent of farmers could face losing their farms, but Mr Key
said he was told it would be closer to 5 to 10 percent.
consultant Peter Fraser said it depended "which trip-wires we
not in a world of a soft-landing, we missed that opportunity four or
five years ago. We're not looking at a hard landing ... we missed
that a number of years ago as well.
are looking at a crash landing and the issue is how many passengers
will get out.
milk prices bounce back to $10 or $8 or something like that then we
will have no problem at all, but if I'm right and they stay around
the $5, plus or minus $1, then it means ... they cannot get their
prices down, they will go out of dairy."
problem was largely caused by farmers letting cost structures get out
of control, he told Checkpoint with John Campbell.
milk prices are low and it's wiping us out."
downplaying dairy crisis - Labour
Key refused to be drawn on the crisis, but said some people were
saying up to 10 percent of dairy farms could fail.
finance spokesperson Grant Robertson said if the worst case scenario
outlined by the Reserve Bank played out, that figure could be closer
to 25 percent.
predicated on pay-outs for three years of $4 or under, we're two
years into that already and I think the prime minister, once again,
is probably downplaying the extent of the crisis in the dairy
sector," he said.
finance spokesperson Grant Robertson Photo: RNZ
/ Alexander Robertson
Key told Morning Report today he had been told five
to 10 percent of farmers could lose their farms.
were a few situations where farmers were over-leveraged, but most
would make it through, he said.
Minister John Key Photo: RNZ /
these situations, it's always good to prepare for the worst case
scenario and to ensure that you're planning this out in terms of what
we need to do to transition though this period."
Shaw said farmers should be supported by the government but not
through direct financial assistance.
think for example that the $1.6 million that they allocated to
irrigation on Thursday would have been better spent going to the
Rural Support Trust to help farmers and their families and suppliers
through the tough transition that many have been going through.
don't believe that a direct cash bail-out is a good idea, I think
that introduces moral hazard and by definition it means you're
supporting the most high cost, least efficient models."
to Dairy New Zealand, there are just under 12,000 dairy farmers in