Dairy sector profit still on the table, but margin gap tightens
DairyNZ’s latest Econ Tracker update shows most farms will still finish the season in a positive position, although the gap has narrowed compared with early season expectations.
He says detractors of the dairy industry like to claim we are subsidised because of the negative externalities of our industry.
"To them I point out that in Europe those farmers get support payments for environmental issues whereas NZ farmers meet the full cost of those initiatives; the joint Federated Farmers – DairyNZ survey found that in the last decade NZ farmers had [spent about] $1 billion in environmental initiatives.
"People may also point to the irrigation fund as a subsidy. But when you have to pay it back it's called a loan not a subsidy."
Hoggard says he has seen plenty of other comments that NZ increased its production during the last decade, so why can't others?
"Yes, we increased our production but we did so based on the economic reality. The market, through increased prices, said it wanted more dairy, so we responded with increased production. Right now the market is saying the opposite, and at this stage we have responded and our production is down -- though with all this rain many of you... have received we may not be down by as much as predicted.
"If Europe wants to have a social welfare system for tractor driving beneficiaries that's its business but it becomes our business when that system has distorting and negative effects on world trade."
