Fonterra believes the European Union's decision to revive export subsidies will have a detrimental impact on the dairy industry worldwide.
Kelvin Wickham, Fonterra's Managing Director of Global Trade, says the move could push down dairy commodity prices even further and slow their recovery.
He says Fonterra acknowledgesthe considerable pressure on producers with lower prices and the credit crunch, but bringing back subsidies will put more pressure on markets when times are already tough.
Wickham says the EU's announcement underlines the importance of finishing off the Doha Trade Round.
Federated Farmers is also concerned about the move. Vice president Frank Brenmuhl says subsidies have been distorting world trade for a long time.
"We thought we had it sorted, or at least in terms of the the ideals behind it but at the first whiff of change they've brought them right back again."
Brenmuhl says the decision means New Zealand dairy earnings will be limited by the price the EU is prepared to sell export products for. He says prices are already down and this will not help.
