Dark Days for Dairy Casts Long Shadows Over Proposed Wairarapa Dams
Friday, March 11, 2016
Media Release for immediate release: Rōpere Consulting Limited
Peter Fraser, Principal - Rōpere Consulting, attended the highly successful Farming for the Future Conference held at
the Carterton Events Centre on Tuesday, March 8; where he presented a seminar highlighting some of the key problems
facing the dairy industry. Mr Fraser explained how factors such excessive debt and irrigation had 'fragilised' farming
systems, leaving many dairy farmers (and share milkers) with high and 'sticky' cost structures so highly exposed to what
are increasingly resembling structurally lower milk prices.
The Conference was held on the same day Fonterra announced a further downgrade to the forecast farm gate milk price for
the 2015/16 season to $3.90/kgMS, which cast a dampener across the proceedings, with discussion soon turning to issues
of farmer welfare and community support.
"It's a horrible thought", Mr Fraser said "but if in 12 months time we find that a quarter of farmers have left the
industry I would not be surprised."
Mr Fraser noted "while short term forecasting is a mug's game, in my view the farm gate milk price for the foreseeable
future will be within a range of $5kgMS +/- $1, not the $6.60 +/- $1.80 seen between 2007 and 2014."
A local farmer voiced the views of many by noting the Wairarapa should escape the worst of the maelstrom currently
engulfing the dairy sector as the region has a comparatively small area devoted to dairy farming.
Mr Fraser agreed with this summation, noting: "I think the Wairarapa has dodged a bullet."
Mr Fraser also questioned the merit of Greater Wellington Regional Council continuing to support the Wairarapa Water
User Project (WWUP).
"WWUP’s own analysis shows these dams are premised on a substantial increase in dairying within the command areas (up
from 22% to 45%), at the expense of dry stock farming (down from 24% to 12%), which seems completely misguided now" Mr
Fraser said.
"Given I labelled WWUP's proposals 'dud dams' when the milk price assumption was well above six dollars, I don't think
an milk price below four dollars is going to make them any better."
"The world has changed a lot" Mr Fraser said, "and we need to change with it; as the last thing anyone wants – including
struggling New Zealand dairy farmers – is lots of additional high cost milk from marginal dairy areas like the Wairarapa
in a world already awash with cheap milk.
"It will therefore be very interesting to see whether WWUP takes note of this enormous project 'off ramp' or instead
takes a leaf out of the Hawke’s Bay Regional Council’s Ruataniwha play-book and battle on regardless of all advice and
reality so continues to spend public money like a drunken sailor."
Ends