Farmer groups and economists have welcomed the Government's move to cull more than 20,000 cattle in a bid to stem the spread of the cattle disease Mycoplasma bovis.

The Ministry for Primary Industries said it had decided that all cattle on the infected properties would be slaughtered.

"The depopulation of entire herds on all 28 infected properties in New Zealand is a critical measure to control the spread of the disease and we will be working closely with those farmers to plan how this will happen," said MPI's response director Geoff Gwyn.

All affected farmers would be compensated for their verifiable losses.

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Once farms are "de-populated" and cleaned, farmers can start re-building a disease-free herd from scratch. Gwyn said MPI was able to take this decision now because it was confident Mycoplasma bovis is not well-established in New Zealand.

Asked if he believed it was possible to eradicate the disease, Gwyn told the Herald: "The jury is still out as to whether it is possible, practical or affordable, or a matter of long-term management."

The ministry is still no closer to finding out where the disease came from.

Agriculture and Biosecurity Minister Damien O'Connor said the cull decision gave farmers much-needed certainty over their futures.

"The Ministry for Primary Industries will begin a cull of 22,332 cattle on all properties infected with Mycoplasma bovis after scientific testing and tracing confirmed the disease was not endemic. This is a critical measure to control the spread of the disease," he said.

ANZ rural economist Con Williams said the disease would affect New Zealand's "disease free" reputation if it became established.

"From a sector point of view, the effect is not substantial, but from an individual point of view it is devastating.

"There is still a lot of uncertainty because there is no clear indication of where the disease came from, so the risk of reinfection seems high on that basis," Williams said.

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He said it appeared the system designed to trace stock movements needed to change.

The cull would not have an impact on milk production or pricing, said ASB Bank rural economist Nathan Penny.

The decision follows estimates that Mycoplasma bovis could cost the country $400 million in economic impact over the next decade.

MPI has confirmed "losses to individual farmers would be a big part of that".

The figures were included in documents released to NZME under the Official Information Act.

New Zealand was one of the last nations in the world without the highly contagious cattle disease until MPI was notified about infected cattle in South Canterbury in July last year.

MPI said the "huge majority" of culled animals would be slaughtered at processing plants.

Culling will not start immediately, due the complex logistics required. However, MPI is confident the process will be completed before "moving day" on June 1, when farmers and sharemilkers move stock around the country to take up new farms or contracts.

Gwyn said culled animals were not a risk if eaten by people.

Federated Farmers said MPI's move showed the Government was committed to trying to eradicate this disease.

"Their determination to do the best we can to get rid of it should be acknowledged by all farmers," said Federated Farmers president Katie Milne.

Carol Barnao, DairyNZ general manager policy, said the decision to cull was not an easy one.

"According to MPI, the bulk milk testing has identified only one new infected property to date, and this gives us some reassurance that M. bovis is not endemic to New Zealand. This is an extremely positive sign," Barnao said.

Federated Farmers leaders are asking rural communities and businesses to rally around farmers who will lose entire herds.

"Farmers want to see mycoplasma eradicated and generally will be applauding the move, but we cannot underestimate the huge emotional toll it will have," said South Canterbury Federated Farmers president Mark Adams.

- Additional reporting Andrea Fox, Samantha Olley