Dairy not biggest cheese: English

The dairy industry is facing its toughest months in four years - but Minister of Finance Bill English says people need to be careful not to "think themselves into a negative mindset".

Low milk payouts were set to create pressure, especially in provincial areas such as Rotorua, Mr English said.

However, speaking at a Rotorua Chamber of Commerce lunch in the city yesterday, he said that while the industry was an important one, it was not necessarily as big as many thought.

"It is only about 20 per cent of export income," Mr English said.

His views on the dairy industry were part of a broader post-Budget speech in which he said the country was trying to achieve moderate, sustainable growth of 2-3 per cent GDP each year.

While the downturn would be tough, other industries such as tourism had strong growth.

Though dairy was big and important to the economy, it was not as big as people thought.

"You have got to keep dairy in context. The next three months are going to be a bit grim. The next three months will be the worst in about four years."

He said the economy had been through "a lot of ups and downs over the last 30 years" and the community had built up a lot of resilience.

"We are only half as dependent on dairy as Australia is on iron ore."

Federated Farmers Rotorua/Taupo spokesman Neil Heather said farmers were used to ups and downs, although perhaps not to the same extent as they were experiencing at the moment.

Tough times for farmers took a while to flow through to the cities and he expected it would take about 12 months for Rotorua to see the impact.

"He's [Mr English] correct. [Farmers] have to re-look at their budgets and stop spending.

"You always know with farming there is going to be downs, most farmers expect that but I don't think dairy expected such a drop."