Lower dairy prices highlight lack of economic diversity

Further falls in dairy prices overnight highlight why New Zealand needs to diversify its economy, the Green Party said today.

Global dairy commodity prices fell further overnight. Whole milk powder, a key price for Fonterra's pay out to farmers, fell another 13.3 percent to $US2538 a tonne.

“Our overwhelming economic focus on dairy exports makes New Zealand extremely vulnerable to global dairy prices,” Green Party Co-leader Russel Norman said.

“Dairy will continue to be an important export sector for New Zealand, but the National Government is failing to diversify the economy or present New Zealand with a credible long-term economic strategy.

“New Zealand needs a smart, low-carbon economy which adds value to our exports and comes from a diverse base. That would lead to a stronger future and better jobs for New Zealanders.”

National plan to invest heavily in further dairy conversions. State-owned enterprise Landcorp is converting more than 25,700 hectares of pine forest in the upper Waikato to dairy. Once completed, the catchment will be home to 30,000 more dairy cows.

“National’s plans for massive dairy conversions in the Waikato are both economically and environmentally irresponsible,” said Dr Norman.

“This is not the time to be investing heavily in dairying when oversupply is already hurting dairy prices and the Waikato river will not be able to take a further 700 tonnes more nitrogen per year.

“The Government and Landcorp should do the right thing for our farmers and our environment and support a moratorium on further dairy conversions. There’s only so much the environment can take, and we believe we’re at that point.

“The Government can put controls on intensification, through its National Policy Statement for Freshwater Management, and help incentivise economic diversification by boosting investment in research and development.

“The Business Operations Survey, released in late March, shows that the proportion of businesses investing in R&D is just eight percent and this number hasn’t changed since 2009. National’s R&D experiment is clearly not working either.”