Rural towns weathering dairy downturn

Thursday, July 23, 2015

Recent headlines detailing the sharp drop in milk prices is undoubtedly causing concern.

But this is not a weight confined to the shoulders of farmers. The dairy industry is New Zealand's largest goods exporter and plays a key role in the economy - the repercussions reach far beyond the farm gate.

Towns around this region ably service the farming community, so when income is tight, local businesses feel the pinch as well.

Most farmers have been through this before. Its a commodity cycle - currently there is a global oversupply. When times are good there are great benefits, not only for farmers, but for others too, such as rural communities, rural service providers, machinery retailers, and financial institutions. So when times are tough those same groups have to ride that wave too.

This region is better equipped to weather this storm than most. The kiwi dollar has slid against all the currencies of our major tourist markets, making this country more affordable for overseas visitors who are arriving in record numbers. With tourism playing a vital role in the local economy this should bring some positive news to retailers and those who benefit from tourism related income.

The commodities cycle and its impact on milk prices may not be a new phenomenon, but that doesn't make this sharp drop any easier. We often hear about the resolve and resilience of farmers but the same applies to the rural communities that support them.