Global milk prices will remain low as long as foreign governments continue to subsidise farmers' incomes, one dairy farmer says.
Photo: 123rf.com
Dairy cooperative Fonterra lowered its forecast milk price from $4.15 per kilogram of milk solids to $3.90 yesterday.
Sharemilker Matthew Zonderop, who has a herd of 200 cows in Waikato, said the lowered forecast was gut-wrenching.
"This is not a cyclical event at all. This is a structural change within the industry," he said.
Next season's prices were likely to stay low and he disagreed with Fonterra's view that the downturn was cyclical.
It had said the price reflected an oversupply of milk around the world, particularly out of the European Union, with sluggish demand and trade sanctions on Russia.
EU farmers had significantly increased milk production following the removal of quotas in April last year.
Mr Zonderop said the Europeans had begged for quotas to be lifted.
"The quotas have now been lifted and we've now got a global glut. The French farmers themselves now are requesting quotas to be put back in place.
"The United States have taken out feed and milk price insurance to secure their own milk price and feed price.
"We're pretty much left out in the open market and letting the market forces dictate our milk price, so it's very hard for us to be able to continue in an environment where a lot of other environments are regulated by governments."
