The government would be irresponsible to not at least consider some form of financial support for dairy farmers in dire straits, Labour Party's finance spokesperson says.
Many farmers could be struggling after Fonterra cut its forecast milk payout for the second time this year to $3.90, well below the breakeven figure.
Grant Robertson told Morning Report the government had been warned two years ago that there was a five-year global milk glut.
Mr Robertson said although a bailout was not currently on the table, it should at least be considered.
"What I'm saying is if you've got nearly half of farmers heading towards default, at that point the government has to look closely at that.
"What mechanism is used, and whether you call it a bailout or whether it's actually just getting a lot closer to the sector and working out which farms shouldn't be in this position."
Mr Robertson said it was important to distinguish between farms that were so overleveraged they would have gone under anyway, and which farms were not.