Dairy pain needs dollar solution

A "Pollyanna-like" view of dairying cannot hide the misery three years of low payouts and a high dollar are causing rural New Zealand according to Northland MP Winston Peters.

"It is really tough out there for farmers, farm workers and communities that depend on them, and the latest GlobalDairyTrade shocker will not help," he said.

"We ought to be seeing price recovery, not a 3.8 per cent fall on top of the previous one. I suggest the Pollyannas who talk up things try to live on break even for three years to see what we mean."

Eleven months ago Fonterra had needed to average US$3000 a metric tonne to hit a $4.60 milk forecast, which ended at $3.90, he said.

Well into the 2016/17 season, whole milk powder was languishing at US$2681 a tonne, so there was a huge question mark over its $5.25 forecast.

"Farmers need to make big calls for their herds, so they need Fonterra to start under-promising and to seriously start over-delivering," Mr Peters added.

"Bad as this is, a crucifying dollar just makes things worse. Despite what happened with dairy the dollar remains just below US72 cents, and both the Reserve Bank and this government are clueless as to what to do about it.

"The government loves the high dollar because it makes imports cheaper, and that creates an illusion of wealth despite debt growing at $370 a second.

"Singapore's exchange-rate based monetary policy is a model for our export-based economy, given that the Reserve Bank has given up and National just doesn't care."