Dairy future ‘bright’ despite difficulties

Press, 27 June 1987, Page 12

Dairy future ‘bright’ despite difficulties

PA Wellington In spite of the dairy industry’s difficulties, its outlook is bright, says the chairman of the Dairy Board, Mr Jim Graham. He told the New Zealand dairy conference in Wellington that in the five years he had headed the industry he had never felt more confident about the long term outlook for dairy farming in New Zealand. “I believe the exchange rate issue will correct itself — too late and too slowly — but inevitably there will be a downward adjustment.” There had been a big change in the board’s market prospects because both the E.C. and the United States had taken firm steps to deal with over-production, he said. The E.C.’s decision to cut milk production 9.5 per cent over a two-year period was clear evidence that the cost of excess milk production had become unacceptable. Mr Graham said that there is now an Acceptance in Europe that the milk quota reductions, would be achieved in full and that export was not a

solution to overproduction. Mr Graham, also attacked the Government’s monetary policies, blaming them for New Zealand’s negative export growth. Mr Graham said they had caused overseas indebtedness to increase at an alarming rate. High interest and exchange rates had progressively pushed the export . and rural sectors into deep economic recession. “There are some unpalatable truths which can no longer be ignored. The disastrous impact of purist monetary policy on the export sector of our economy is patently clear,” he said. New Zealand’s future was increasingly in the hands . of overseas creditors. Mr Graham told the Minister of Agriculture, Mr Moyle, who attended the conference, that the Government had chosen to ignore the health of the export sector in a “singleminded and simplistic drive to reduce inflation.” “The rundown in agriculture and exporting generally will take years to

recover and our economy' will recover more slowly, and be less strong as a result” , . Changes were needed in the economy. But they could have been achieved, with substantially less pain than that inflicted on the rural sector over the last three years, he said. Mr Moyle, said there was reason to be positive about the future. He also said he felt "a quiet mood of confidence” in the industry.

Fanners and others had escaped the "hell and perdition” predicted by some. Relatively few fanners were found to be beyond restructuring, and this had been recognised by every farmer long before subsidies were removed. The Rural Bank’s mortgage discount scheme was due to close in a few days, and fewer than 7000 applications would have been made.