This government has been artificiality buoyed by a diary boom, now the bust leaves us highly exposed:
Milk price payout drop to plunge NZ into ‘$13b economic black hole’
Fonterra has forecast a $5.25-per-kg payout for milk solids in the 2015/16 season, and dropped the current season price by 10 cents. The next-season forecast is less than analyst predictions of about $5.50 per kg, and will be below the break-even point for many farmers. Last season’s payments had already fallen to an eight-year low of $4.50 per kg, but that figure has now dropped even lower to $4.40.
Labour’s Finance Spokesperson Grant Robertson responded to the drop by saying New Zealand has all its eggs in the dairy basket, and needs to diversify its industries to avoid Budget deficits.
“The milk price payout was $8.40 last season. It is dropping to $4.40 this season and will only recover to $5.25 next season,” Mr Robertson said
“That’s a $13 billion two-year economic black hole over the next two years. The big black hole in the Government’s budget was a plan to diversify the economy so New Zealand is not so reliant on commodity traders.”
Fonterra Chairman John Wilson said global commodity prices had not increased as expected, as markets were oversupplied with dairy.
Markets are oversupplied with dairy. The good times boom is over. A wise government would have already diversified into a green economy. An average government would start the process now. What will the Nats do?