Dairy payout shows the Government and Fonterra there is a limit to a ‘no limit’ strategy

Farmers and rural communities are wearing the cost of the National Government and Fonterra’s strategy of unlimited growth in milk supply, the Green Party said today.

“Fonterra’s announcement today that its forecast farmgate milk price has fallen to $3.85/kg of milk solids will put dairy farmers under even more pressure, will increase farm debt, wipe billions off the rural economy and hit communities hard,” said Green Party primary industries spokesperson Eugenie Sage.

“The National Government and Fonterra’s preoccupation with growth at all costs is making the dairy sector more vulnerable and less resilient to swings in world commodity prices as well as drought and extreme weather events.

“Fonterra intend to raise production from 20 billion litres today to 30 billion litres in 2025. The focus on increasing milk volume rather than value is hurting farmers, our economy and our communities. At the same time, it is increasing water pollution and destroying biodiversity when vulnerable lands are converted.

“Today’s forecast payout highlights that industrial production of cheap milk powder at the lowest price on the largest possible scale is a lose/lose strategy for farmers, the economy, and the environment.

“We know that below $5.70/kg, many farmers aren’t breaking even, but the Government is continuing to encourage more dairy conversions no matter what the economic and environmental costs.

“The National Government and Fonterra need to focus on adding value to our products, not just producing volume. And we need to substantially improve our environmental performance so that we can genuinely market food and fibre as coming from clean, green, 100% Pure NZ.

“Adding value is about marketing and branding, as well as technological innovation. It is about telling the story of dairy products of provenance.  

“We can never win as just a commodity producer. We can win in producing foods of provenance from a clean, green and safe New Zealand if we work to improve our environmental performance to make the 100% Pure NZ brand real, and tell that story.

“To do that, we need more investment in research and development to diversify our primary sector, and much more attention to environmental performance,” said Ms Sage.