Long Shadows Cast Over Proposed Wairarapa Dams

Dark Days for Dairy Casts Long Shadows Over Proposed Wairarapa Dams

Friday, March 11, 2016

Media Release for immediate release: Rōpere Consulting Limited

Peter Fraser, Principal - Rōpere Consulting, attended the highly successful Farming for the Future Conference held at the Carterton Events Centre on Tuesday, March 8; where he presented a seminar highlighting some of the key problems facing the dairy industry. Mr Fraser explained how factors such excessive debt and irrigation had 'fragilised' farming systems, leaving many dairy farmers (and share milkers) with high and 'sticky' cost structures so highly exposed to what are increasingly resembling structurally lower milk prices.

The Conference was held on the same day Fonterra announced a further downgrade to the forecast farm gate milk price for the 2015/16 season to $3.90/kgMS, which cast a dampener across the proceedings, with discussion soon turning to issues of farmer welfare and community support.

"It's a horrible thought", Mr Fraser said "but if in 12 months time we find that a quarter of farmers have left the industry I would not be surprised."

Mr Fraser noted "while short term forecasting is a mug's game, in my view the farm gate milk price for the foreseeable future will be within a range of $5kgMS +/- $1, not the $6.60 +/- $1.80 seen between 2007 and 2014."

A local farmer voiced the views of many by noting the Wairarapa should escape the worst of the maelstrom currently engulfing the dairy sector as the region has a comparatively small area devoted to dairy farming.

Mr Fraser agreed with this summation, noting: "I think the Wairarapa has dodged a bullet."

Mr Fraser also questioned the merit of Greater Wellington Regional Council continuing to support the Wairarapa Water User Project (WWUP).

"WWUP’s own analysis shows these dams are premised on a substantial increase in dairying within the command areas (up from 22% to 45%), at the expense of dry stock farming (down from 24% to 12%), which seems completely misguided now" Mr Fraser said.

"Given I labelled WWUP's proposals 'dud dams' when the milk price assumption was well above six dollars, I don't think an milk price below four dollars is going to make them any better."

"The world has changed a lot" Mr Fraser said, "and we need to change with it; as the last thing anyone wants – including struggling New Zealand dairy farmers – is lots of additional high cost milk from marginal dairy areas like the Wairarapa in a world already awash with cheap milk.

"It will therefore be very interesting to see whether WWUP takes note of this enormous project 'off ramp' or instead takes a leaf out of the Hawke’s Bay Regional Council’s Ruataniwha play-book and battle on regardless of all advice and reality so continues to spend public money like a drunken sailor."

Ends

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