9 Jul 2013

Farmers just not earning enough to climb out of debt - Rowarth

1:45 pm on 9 July 2013

A leading agribusiness specialist, Jacqueline Rowarth of Waikato University, says farming's record debt is due to poor returns and demands for compliance.

Latest Reserve Bank monthly data show that agricultural sector credit climbed $422 million in May to $50.7 billion, 5% higher than in May 2012.

Federated Farmers says dairy farmers owe an average of $20 for every kilo of milk solids they produce.

Fonterra is forecasting a return during the current season of $7 a kilo of milk solids.

Professor Rowarth says the returns farmers of all hues get for their products are not enough to cover the cost of compliance and updating technologies, and the only way they can afford such improvements is to take on more debt.

She says the fundamental problem is that food is cheaper than it has ever been.