The Government promoted and pushed the dairy boom and bears some responsibility for the "crash'', Green Party co-leader James Shaw says.
Mr Shaw was in Dunedin last night for a "beers and banter'' event with students.
Speaking to the Otago Daily Times, he said the Government strongly supported the dairy boom through investment in irrigation projects.
"The Government has induced a boom which is unsustainable both in economic and environmental terms.''
He said neither the Greens nor their likely coalition partner, Labour, supported bailing out financially distressed farmers, but they needed more support for stress and financial advice.
Asked if the Government would suffer politically with fallout from the downturn, he said he did not know.
"They weather the storms.''
Talk of bail-outs was "dangerous'', because it would mean subsidising people to farm inefficiently with high infrastructure costs, he said.
He felt especially sorry for sharemilkers who bought herds at the height of the boom and for farm suppliers, who were facing tough times.
He did not think the situation threatened the economy as a whole, but it was a "serious risk'' and the effects also would be felt outside the dairy industry.
"We're in for a really uncomfortable adjustment.
"We really need to beef up the rural support trusts to help ease that.''
The situation highlighted the need for New Zealand to produce products that commanded high prices overseas.
Organic milk powder was selling for five times as much as standard milk powder on the global market, and that would help nudge some farmers towards organic farming, Mr Shaw said.
In some parts of the country, organic milk had lower production costs than standard milk, he said.
● Otago Rural Support Trust: 0800 787-254.
