May 27, 2014

New Zealand's dairy farmers are bracing for a sharp drop in earnings as milk prices fall from record levels this coming dairy season, reported Reuters.

New Zealand's dairy industry is already highly indebted, while the price falls are adding pressure on the country's economic growth.

With increased milk production both in New Zealand and in the global markets, Fonterra, the country's largest dairy cooperative, is expected to make a final payout around NZD7.00/kgms (US$5.99/kgms) this coming season.

Though the figure is above the 10-year average around NZD5.90 (US$5.05), it could shave NZD2.3 billion (US$1.97 billion) off the economy.

Dairy exports account for ¼ of all exports from New Zealand.