Dairy farmers not looking for handouts

Farmers want better infrastructure, roads and greater access to broadband, but are not looking for any handouts from the Government in Thursday's Budget.

Dairy farmers across the Tasman are looking to politicians to support them through the current milk price slump but their New Zealand counterparts do not expect any such treatment from the Budget.

Deputy Australian Prime Minister Barnaby Joyce, after a three-day trip to Victoria, last week called for a bipartisan approach to develop a dairy industry support package to help dairy farmers struggling with milk price downgrades from the two biggest players in that market - Murray Goulburn and Fonterra.

But New Zealand dairy farmers, many with memories going back to the farm subsidy days of the 1970s and early 1980s, don't expect any special treatment from the Budget.

In general terms, Federated Farmers wants the Government to keep a tight rein on the country's finances, to help farmers improve productivity, and to address the imbalances posed by Auckland's booming property market.

But Federated Farmers dairy chairman Andrew Hoggard said dairy farmers did not want handouts.

"The Budget can't do anything about the world price so that's at the forefront of our minds at the moment," Hoggard said.

"In Australia - to be blunt - the response is a bit over the top.

"The world price for dairy is the world price, and Australia can't hide from it.

"The way their politicians are talking - it's all about stop-gap measures - short-term expediency," he said.

"In the long term, it comes down to how we get volatility out of the world dairy market and a lot of that comes down to removing trade barriers."

Graham Smith. Photo / Dean Purcell

Federated Farmers' chief executive' Graham Smith said the Budget needed to stay in surplus because it would provide options in reducing overall debt.

The farmers' lobby group has for some time argued that the Government needs to increase spending on science and technology.

Smith said Federated Farmers would like to see the country's infrastructure - roads, energy and water - improved.

In particular, it wants farmers to have greater access to broadband to keep up with developments in precision agriculture.

Finance Minister Bill English said early this year that milk prices would never reach the record of $8.40 a kg achieved in 2013/4, but that he was confident farmers would get through a drop in payouts and rising debt levels without government intervention.

Dairy prices ended the 2015/16 season on a positive note with the GlobalDairyTrade auction price index registering a 2.6 per cent gain last week.

Prices for the all-important wholemilk powder firmed by 3 per cent to US$2252 a tonne - though still falling well short of the US$3000 a tonne required to restore stability to the market.

ASB Bank expects that Fonterra's opening forecast for the 2016/17 season, due this Thursday, will be in the vicinity of $4.80/kg but for the price to lift to $6/kg by the end of the season.