Dairy sector profit still on the table, but margin gap tightens
DairyNZ’s latest Econ Tracker update shows most farms will still finish the season in a positive position, although the gap has narrowed compared with early season expectations.
“To come up with a fair approach we have been making use of an independent panel,” he told Dairy News in a joint statement from both industry-good bodies.
“We have had initial advice and are providing feedback. Once the process has finalised, a recommendation will go to our respective boards and be shared with farmers.
“Given this is a sensitive and important process, we can’t comment on the specifics until it has been agreed and approved by our respective boards.”
The cost of the eradication programme is reckoned at $886 million over 10 years. MPI says $16m of that is loss of production and will be borne by farmers, while $870m is the cost of the response, including compensation.
The Government will pay 68% of that and the two levying bodies, DairyNZ and BLNZ, will pay 32% (about $278m).
But exactly how it will be split between them remains under discussion. Earlier this year dairy industry sources said an 80/20 split between dairy farmers and beef farmers would be fair. However, beef farmers were pushing for a 90/10 split, pointing out that dairy farms are at the centre of the outbreak.
