14 May 2015

Govt at fault in dairy debt, say Greens

7:23 am on 14 May 2015

The Green Party says the Government has played a big role in the debt-driven expansion of the dairy industry, which is now being identified as a threat to the economy.

Dairy farmer in a milking shed

Photo: AFP

The Reserve Bank said high levels of debt in the dairy sector were a risk to New Zealand's financial system, particularly as falling dairy prices cut farmers incomes.

It said dairy debt had trebled since 2003 to $34 billion today, half of which is owed by 20 percent of farmers.

Russel Norman

Russel Norman Photo: RNZ / Kim Baker Wilson

Green Party co-leader Russel Norman said government policies had fuelled the sector's expansion.

"First, it didn't require the dairy sector to pay for its water, so it got its fresh water for free and it also got to pollute water for free so they were subsidised by the tax payer.

"Secondly the carbon emissions from the dairy sector are paid for by the taxpayer - the dairy sector doesn't have to pay the cost of those emissions.

"And thirdly, there's been direct subsidies in the form of irrigation subsidies - $400 million worth of irrigation subsidies."