Whether a decision is made to eradicate or manage the Mycoplasma bovis outbreak in New Zealand, already fragile confidence in the sector has taken ''a big knock'', Westpac senior economist Anne Boniface says.
While the final call was yet to be made - the Ministry for Primary Industries has signalled it was likely by the end of the month - recent developments seemed to swing in favour of containment and management of the bacterial disease, she said.
If that was the case the industry was set to face increased costs for animal healthcare and potentially contributing to management of Mycoplasma bovis on an industry-wide basis, just as the other major dairy exporters - Australia, Europe and the United States - did.
The cost of fighting the outbreak would likely run into hundreds of millions of dollars and the knock to the sector was caused not only by the incursion itself, but also ''widespread discontent'' about how MPI was handling the process, Ms Boniface said.
Agriculture and Biosecurity Minister Damien O'Connor said a ''top level'' meeting with farming leaders this week focused on helping farmers through the next few weeks.
''We all committed to make a decision about the next steps in the M. bovis response within the next couple of weeks. We talked about phased eradication and long-term management.
''It is a difficult choice that we will make together once we receive more advice from the Technical Advisory Group in the coming days,'' he said.
The Government and farming groups were committed to improving the National Animal Identification and Tracing (NAIT) system which had not worked as well as it should have, Mr O'Connor said.
In ASB's Commodities Weekly, ASB senior rural economist Nathan Penny said the disease had the potential to reduce New Zealand industry productivity via increased animal health costs and lower production.
Lower New Zealand dairy production was normally offset by higher dairy prices. However, there was a risk that the disease's impact on net dairy incomes was negative, particularly in the short term, as management of the disease might take time to develop, Mr Penny said.