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Farmers are backing Reserve Bank Governor Graeme Wheeler's comments that the high New Zealand dollar is unjustified and unsustainable.
"There is no basis for the New Zealand dollar's strength and with the global recovery gathering steam, investors need to know it could drop like a stone," says Dr William Rolleston, Federated Farmers president.
Federated Farmers feels a fair value for the Kiwi is more likely in the low 70 cent range against the US and in the low 80 cent range against the Aussie, he says.
"Those buying the dollar haven't grasped that Fonterra has reduced its in-season milk price forecast to $5.30/kgMS. That's in the same ballpark as Synlait, Westland and Open Country.
"It is going to be a buyers market for milk for the rest of this season and the hangover will possibly continue into 2015-16, especially with European quotas coming off."
In a rare statement on Thursday, Wheeler said the dollar is susceptible to a significant downward adjustment.
Wheeler said the bank will welcome a move towards a more sustainable exchange rate level.
He noted the real exchange rate has not adjusted materially to the recent downward movement in commodity prices. Global dairy prices have fallen by 45% since February 2014; despite this, in August, New Zealand's real effective exchange rate was 1% higher than its February 2014 level.
Rolleston says dairy farm incomes this season are expected to be about $5 billion lower - equivalent to a 2.2% decline in national income.
"Despite this, in August, New Zealand's real effective exchange rate was 1% higher than its February 2014 level.
"You are talking for a primary industry worth one quarter of New Zealand's merchandise exports battening down the hatches and that will radiate out to the wider economy.
"While it is not milk and disaster investors need to take some smelling salts and wake up to the reality that the dollar is overvalued.
"If the dollar was at a fair value it would take a heap of pressure off dairy and immeasurably help the new stars of our primary industries, that being beef and sheep.
"A dollar close to fair value would allow sheep and beef farmers to make financial hay while the market sun is shining. They deserve a break but an 'Unjustified and Unsustainable' dollar must drop in order to give them that break," says Rolleston.
Central Otago District Council (CODC) has voted against a plan to spread treated sewage sludge from Cromwell and Alexandra on farmland near Lauder, a decision Federated Farmers says reflects strong opposition from rural residents.
Federated Farmers has called on Central Otago District Council (CODC) to drop or vote down a plan to truck sludge from Alexandra and Cromwell to farmland near Lauder, warning it would compound an "outrageous" situation created by a separate council's decision weeks earlier.
Federated Farmers says new legislation replacing the Resource Management Act will cut red tape, unlock investment and help grow New Zealand's export-led economy, after the Planning Bill and Natural Environment Bill passed their third reading in Parliament yesterday.
Leading figures from the major political parties will be questioned on their primary sector policies at the Rural Issues Debate at Mystery Creek Events Centre, Hamilton, on 30 September.
Will the good times last? That's one of the key issues to come out of the latest Federated Farmers confidence survey.
Waikato milk processor Tatua has again declared a record milk payout to farmer shareholders, leaving other processors in the dust.
A Labour-led Government won’t be bringing back the controversial freshwater rules of 2020.
National’s much-touted free trade deal with India featured in the Rural Issues Debate at Mystery Creek, Hamilton on Wednesday night.
New Zealand's 2026-27 freshwater fishing season has opened, with anglers encouraged to head to rivers and lakes over the coming days as conditions look favourable across much of the country.
Central Otago District Council (CODC) has voted against a plan to spread treated sewage sludge from Cromwell and Alexandra on farmland near Lauder, a decision Federated Farmers says reflects strong opposition from rural residents.
Pāmu has released its FY26 Integrated Annual Report, reporting a Net Operating Profit of $113 million, more than double the $49 million recorded in FY25.
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