Opposition parties slam Govt over slashed Fonterra payout

The Government copped the full blast of blame from opposition parties following the release yesterday of a sharply reduced Fonterra payout for the current season.

Fonterra announced the forecast farm-gate milk price available to farmers would be $3.85 a kilogram of milk solids, down from $5.25 a kg/ms, which was right on target from market predictions earlier in the week.

About $3 billion would be wiped from the economy if yesterday's forecast remains unchanged.

Labour finance spokesman Grant Robertson said the Government's complacency in the face of plunging global dairy prices was recklessly irresponsible as farmers and communities around them saw billions of dollars disappear in front of their eyes.

''National has literally laughed off concerns over the looming collapse in dairy prices for over a year now.''

The Government had refused to listen to forecasts of lower prices, insisting prices would bounce back, he said.

The Fonterra payout would make life tough for many farmers.

It also put pressure on the communities around them.

While acknowledging the Government was not responsible for global dairy prices, Mr Robertson said the Government was in charge of the economy.

It had failed to support regions sufficiently to diversify and create new opportunities.

Instead, Prime Minister John Key and Finance Minister Bill English had been happy to ride the commodity wave and rely on the Canterbury rebuild.

Mr Key had been ''remarkably flippant'' yesterday, calling the price collapse a ''blip'' and saying it would come right because China would keep buying milk, Mr Robertson said.

New Zealand First primary industries spokesman Richard Prosser said dairy farmers needed the support of the Government to get through the tough times, starting with a comprehensive view of the Dairy Industry Restructuring Act.

The review should include Trading Among Farmers as well as the role and functions of a shareholders' council.

Funding to all rural support trusts needed to be at a level at which people could be put on the road to visit farmers, especially younger farmers and sharemilkers, he said.

Green Party primary industries spokeswoman Eugenie Sage said the Government and Fonterra's preoccupation with growth at all costs was making the dairy sector more vulnerable and less resilient to swings in world commodity prices, as well as drought and extreme weather events.

''Today's forecast payout highlights industrial production of cheap milk powder at the lowest price on the largest possible scale is a lose-lose strategy for farmers, the economy and the environment.''

Below $5.70 kg/ms, many farmers were not breaking even.

But the Government was continuing to encourage more dairy conversions no matter what the economic and environmental costs.

The Government and Fonterra needed to focus on adding value to the products, not just producing volume.

And there was a need to substantially improve the country's environmental performance so it could genuinely market food and fibre as coming from ''pure NZ'', she said.

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