Key tips dairy pay­out spike on its way

Matamata Chronicle - - Out & About - GER­ALD PIDDOCK

Prime Min­is­ter John Key says dairy prices could spike later this sea­son as pro­duc­tion both in New Zealand and over­seas con­tin­ues to fall.

In con­ver­sa­tions he re­cently had with Fon­terra bosses, Key said they ex­pected the milk fore­cast to re­main around $6 per kilo­gram of milk solids, but there were con­cerned it could jump next year.

‘‘They are quite wor­ried about the pay­out re­ally spik­ing up,’’ he told Waikato farm­ers at the Waikato Fed­er­ated Farm­ers build­ing in Hamil­ton re­cently. most in the dairy in­dus­try wanted less volatil­ity in dairy prices, Key said. A price spike also sti­fled much needed re­form in the Euro­pean dairy in­dus­try.

‘‘The re­ally strong view would be that I think it’s very un­likely you will see a pay­out un­der $6/kg MS. The ques­tion is how high will it go.’’

Key’s per­sonal view was that the New Zealand dol­lar rel­a­tive to the Amer­i­can dol­lar would fall, which would also help with the dairy pay­out. While the eco­nomic out­look was pos­i­tive, US presi- dent elect Don­ald Trump would raise in­ter­est rates be­cause he was likely to spend money and stim­u­late the Amer­i­can econ­omy.

‘‘If those in­ter­est rates come up a bit, the Kiwi-US rate should come down a wee bit.’’

There were three op­tions if Trump pulled out of the TPPA, Key said.

The agree­ment be­came parked up un­til a new pres­i­dent wanted to res­ur­rect it, the re­main­ing coun­tries formed the TPPA with­out the United States, and thirdly, that Trump re-ne­go­ti­ated the agree­ment.

Key hoped Trump would change his stance be­cause of his busi­ness back­ground and con­cern that a deal with­out the United States could put China in a po­lit­i­cally ad­van­ta­geous po­si­tion in all of Asia.

‘‘He’s a busi­ness guy and don’t be sur­prised...if in some point in the fu­ture, all of a sud­den it’s a good idea.’’

Trump’s vot­ers were also op­posed to cli­mate change and this would cause is­sues be­cause the world’s three big­gest emit­ters were China, US and In­dia. If the US pulled out of the Paris Cli­mate Agree­ment, it could put pres­sure on those other two.

Key said farm­ers had to take it se­ri­ously. It led to cat­a­strophic weather pat­terns and the most ex­posed in­dus­try to this is­sue was agri­cul­ture.

‘‘If any­one un­der­stands the im­pact of bad weather and cli­mate change, it’s farm­ers. It’s Russian roulette and you can’t af­ford to take the risk.’’

NZ could not fix it alone. Putting agri­cul­ture emis­sions into the Emis­sions Trad­ing Scheme was sim­ply a tax be­cause cur­rently there was lit­tle farm­ers could do to con­trol an­i­mal emis­sions. Un­til farm­ers had tools to curb emis­sions, they should not come into the scheme, he said.

‘‘There's a lot of dif­fer­ent fac­tors go­ing on, but the broad guts of it is that world pro­duc­tion is go­ing to be down.’’

Prime Min­is­ter John Key says it is un­likely the dairy pay­out will fall be­low $6/kg milk solids. On the right is Waikato Fed­er­ated Farm­ers pres­i­dent Chris Lewis.

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