LUXTON QUERIES COMMENTS ON DAIRY INDUSTRY

  • John Luxton
Commerce and Industry

Minister of Commerce and Associate Agriculture today queried comments made about his speech to 250 dairy farmers at the Jersey New Zealand Conference in New Plymouth yesterday.

Mr Luxton again today said his primary concern was the profitability of hard working dairy farmers, who are taking about a $50,000 cold hard cash cut in average income over two years.

The first comment was, "the reasons dairy farmers incomes were down related to commodity prices and the appreciation of the dollar, not board performance".

Mr Luxton responded today, "If this is what the board believe, then it follows that when payout goes up, because of changes in the value of the dollar and commodity prices, then obviously board performance is not relevant either."

"However the board is to be congratulated on their treasury operations whose foreign currency management hedging gains exceeded $240 million in 1996 (source 1996 Annual report)

The second comment from the Board related to value added, saying, " And Mr Luxton is wrong to characterise the board as restricting innovation; Any business which lifted its added value game by $100 million in a year did not fit into that category"

Mr Luxton responded, "Investing in adding value, and not just cost, was vital to improve the incomes of dairy farmers. The board is to be applaued for increasing "value added" by $100 million. However their turnover increased by about $800 million over the same period.

"My office has asked the board for more details on the total amount of "added value", and their definition of "added value". We have yet to get a specific response.

"However it appears from the boards own comments that the effect of the drop in commodity prices on payouts is that not enough value is added to increase farmers profits. This is one of the issues I am reflecting farmer concerns about

"New Zealand's dairy farmers are hard working business people. When they are told to take such big drops in income, they have the right to ask questions, " Mr Luxton concluded.