29 Nov 2013

Dairy price drop predicted

8:00 am on 29 November 2013

An agribusiness analyst says New Zealand needs to prepare itself for a big drop in world dairy prices over the next year.

Ian Proudfoot, agribusiness leader for global accountancy firm KPMG, identified commodity price volatility as one of the risks that the rural sector needs to plan for, when he spoke at a future farming conference in Wellington this week.

He says because of its size, New Zealand is generally not a price setter when it comes to primary products, even for dairy products.

Mr Proudfoot says over the next 12 months there is likely to be a dramatic change in the dairy price driven by United States supply.

He says grain prices have gone down and the market price of dairy is high which will lead to an increase in US supply.

Mr Proudfoot says biosecurity remains the biggest risk area identified by primary industries.

He says the kiwifruit vine-killing disease PSA has shown the effects of getting biosecurity wrong.

Mr Proudfoot says New Zealand has also been put at threat in other areas, particularly with palm kernel expeller.

He says it represents a significant biosecurity risk to New Zealand's economy and it's one that must be managed properly.