23 Jul 2015

Extent of dairy price drop 'unexpected'

7:08 pm on 23 July 2015

The Government says dairy prices have fallen further than it expected and it now believes they could go even lower.

Dairy cow north of Matamata.

Photo: RNZ / Alexander Robertson

The Finance Minister told MPs today that dairy prices are 40 percent lower than they were in March.

Bill English during caucus run 23/06/2015

Finance Minister Bill English Photo: RNZ / Alexander Robertson

Bill English said neither industry experts nor the Government foresaw the extent of the dairy price collapse and how tough conditions would become for farmers.

He said a fall in prices of this magnitude on a sector that generated 20 percent of exports would have flow on effects for economic growth.

The Reserve Bank cut the official cash rate today - noting that dairy prices had fallen about 20 percent in the last six weeks.