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New figures show tougher times for New Zealand dairy farmers

Xinhua, December 15, 2015 Adjust font size:

About four in every five farmers in New Zealand's pillar dairy sector are operating at a loss, according to estimates in a report from the Reserve Bank of New Zealand (RBNZ) Tuesday.

Farmers were increasing their debt levels after a series of setbacks leading to low returns, said the RBNZ report.

Between February 2014 and August this year, global dairy prices fell by more than 65 percent due to increased global supply, sanctions on Russian imports, and reduced Chinese demand following a build-up of inventories during the 2013-2014 season, it said.

While New Zealand's falling exchange rate had dampened the price fall, recent results had "not been favorable and prices remain well below their long-term average."

"As a result of sustained lower milk prices, dairy farmers are currently facing significant cash flow pressures," it said.

An estimated 49 percent of dairy farmers were operating below break-even in the season from July 2014 to June 2015 and about 80 percent of farmers, representing almost 90 percent of sectoral debt, were expected to have "negative cash flow" this season.

The report was published on the same day as the government statistics agency released figures showing the first drop in New Zealand's dairy cattle numbers since 2005.

The country had total of 6.4 million dairy cattle at the end of June 2015, according to Statistics New Zealand.

"We have 300,000 fewer dairy cattle than in 2014, which is a reversal of the trend of increases in the last 10 years," Business Indicators Senior Manager Neil Kelly said in a statement.

"Both the national dairy milking herd and the replacement herd have declined. This comes at a time of falling international prices and lower milk solid payouts," he added.

A survey of 1,100 farmers by the Federated Farmers industry group, also out Tuesday showed the proportion of farmers seeking support with their budget from an accountant was up from 38.7 percent in August to 43.2 percent, and the proportion seeking advice and assistance on budgeting from banks up to 50.7 percent from 49.5 percent.

"We're staring down the barrel of an El Nino summer and it seems there are more difficult months ahead for the dairy industry, so we need these high levels of support to continue," Federated Farmers National President William Rolleston said in a statement. Endit