China’s milk stockpile leaves New Zealand dairy farmers struggling

China once helped drive global dairy demand but its stockpiling of powdered milk sent prices plunging and has left farmers in the world’s top milk exporter, New Zealand, struggling to stay afloat and its agriculture-dependent economy facing risks. New Zealand’s dairy sector was until recently the backbone of the economy, representing around 25% of exports, but in the past two years farmers have had $4,74 billion wiped off their collective revenue. Today, around 85% of farms run at a loss, leaving them fighting to stave off bankruptcy and forced farm sales.

Farmers’ struggles pose a risk to economic growth, and banks exposed to the sector, but alongside the financial cost some fear a growing human toll: suicides as a result of the stress. The dairy sector’s woes have hit the wider economy, with the central bank forecasting growth of around 2,3% in the year to March 2016, down from 3,6% a year earlier.

Weak dairy prices will have a “significant negative impact on the wider economy,” said BNZ Head of Research Stephen Toplis. To read more, click HERE.