Originally Posted by
Daytr
Farmers would be loving it if they were going to get the $6/kg in the article, but instead they are going to get $4.40.
So that $4.5Bln+ is now a lot +++ more likely over $7Bln.
There will be farmers that go to the wall on this, how many will depend on if & when the price recovers, however NZ is now one of the most expensive producers of dairy product in the world because of intensification & dairy conversion on unsuitable land.
Will it cause a recession? Who knows, but I prefer to look at current facts rather than relying on what happened in the past.
I would suggest this is by far the biggest fall in dollar value & [perhaps percentage terms for dairy. In dollar terms for any export market in NZ.
In relative dollar terms it would be similar to the wool glut of the late 70s or something similar.
The purse strings in places like the Waikato are already drying up & it will impact a hell of a lot more than just farm buildings.
Importing of feed, new machinery, fertilizer, wages among others will be first things to be wound back.
Its a cliché, but its different this time, as previously we haven't had the conversion of so many farmers to dairy as we have seen in recent years. We now have a dairy industry in sheep heartlands of the Hawkes Bay and Canterbury. So its more wide spread & the price fall much bigger.