Dif­fi­cult days for dairy as in­come slips

The Tribune (NZ) - - COMMENT OPINION - IAIN LEES-GAL­LOWAY

New Zealand’s dairy in­dus­try is go­ing through dif­fi­cult times.

Many farm­ers are head­ing into their third loss-mak­ing sea­son in a row. Many are deep in debt and most won’t have paid them­selves for some time.

Mean­while, sharp-eyed over­seas in­vestors are look­ing for a bar­gain.

No one wants that. There’s no point in see­ing good farm­ers on ef­fi­cient farms walk­ing off the land and it be­ing snapped up by off-shore in­ter­ests.

Na­tional is mak­ing like a pos­sum in the head­lights. It has been in de­nial for months now. Ru­ral com­mu­ni­ties need lead­er­ship and con­fi­dence that their gov­ern­ment is do­ing some­thing. It has a big stake in this. Some ex­perts es­ti­mate that 25 per cent of dairy farm­ers are in trou­ble. John Key puts it at 10 per cent. Tak­ing the lower fig­ure that’s 1,200 farms, 800 of which would be fam­ily farms, and an area equiv­a­lent to 175,000 hectares – that’s larger than Auck­land and Christchurch com­bined and seven times the 26,000 hectares sold into for­eign own­er­ship last year.

Na­tional shrugs and says ‘that’s life’. But we’re talk­ing about fam­i­lies who have worked the land for gen­er­a­tions, and took on more debt to ex­pand when the gov­ern­ment told them to. It’s not good enough for Na­tional to turn their back and let fam­ily farms be swal­lowed up by over­seas buy­ers when times get tough, espe­cially when this is a prob­lem they helped to cre­ate.

And it’s not just those hun­dreds of farm­ing fam­i­lies, but all of us, who pay the price if that hap­pens.

The dairy in­dus­try’s woes have a real im­pact on the rest of the econ­omy, from ru­ral ar­eas through to cen­tral Auck­land. That’s re­flected in MYOB’s lat­est Business Mon­i­tor, which shows 21 per cent of SMEs are feel­ing the ef­fects.

It’s why we need a sum­mit – where Fon­terra, Fed­er­ated Farm­ers, gov­ern­ment of­fi­cials, bank­ing reps, and re­tail­ers sit down in a room, put their heads to­gether and make an ac­tion plan.

But that’s the short term. In the long term we need to strengthen and di­ver­sify our econ­omy. Right now we are to­tally re­liant on one com­pany (Fon­terra) sell­ing one prod­uct (milk pow­der) to one coun­try (China). That’s not a recipe for suc­cess.

We need an econ­omy that sup­ports in­no­va­tive, new in­dus­tries that can pay a high wage and cre­ate good op­por­tu­ni­ties. We need a Gov­ern­ment that is ready to make the changes nec­es­sary to make our econ­omy fit for the 21st cen­tury.

‘‘Many farm­ers are head­ing into their third loss-mak­ing sea­son in a row.

PHOTO: FAIR­FAX NZ

The down­turn in the Fon­terra pay­out has cre­ated enor­mous pres­sure for dairy farms.

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