Aussie PM promises dairy subsides if re-elected

Malcolm Turnbull and his agriculture minister are dangling the prospect of dairy recovery loans in front of farmers just weeks before the Aussie election.

Australia’s Prime Minister has offered cash-strapped farmers across the ditch a lifeline if his Liberal government wins next month’s election.

Malcolm Turnbull says his government will offer support for Australian dairy farmers whose incomes has been cut by Murray Goulburn and Fonterra.

This will come in the form of $555 million in dairy recovery concessional loans, $20 million to fast track the upgrade irrigation, $2 million to establish a commodity milk price index as well as fast tracking farm household allowance applications.

Mr Turnbull says the concessional loans will be funded by expanding the drought concessional loan scheme to include dairy-specific criteria.

The Aussie prime minister’s announcement comes just weeks after the countries two biggest dairy players, Fonterra and Murray Goulburn, cut their milk prices to $A5/kgMS and  $A4.75/kgMS respectively.  

Both dairy giants blamed weak demand and strong supply for the lower prices.

Fonterra said its price change “better reflects the reality of the supply and demand imbalance affecting global dairy commodity prices, compounded by the recent strength of the Australian dollar.”

It also opted to offer its suppliers an interest-bearing support loan of up to 60c per kgMS, linked to a supply commitment and is repayable from the 2018 financial year.

Fonterra’s forecast farmgate milk price to New Zealand farmers was confirmed at $3.90/kgMS and the forecast for the 2016/17 season is $4.25/kgMS. 

In March, Finance Minister Bill English told NBR New Zealand dairy farmers would not be receiving a bailout, whether that was in the form of tax breaks, subsidies or the Reserve Bank guaranteeing bank loans.

But Australia’s Minister for Agriculture Barnaby Joyce says he wants to send a “clear message” the government is backing Aussie farmers.

“The coalition will be making immediately available $55 million in dairy recovery concessional loans for Murray Goulburn and Fonterra suppliers this year, as well as access to $500 million in concessional loans over 2016-17 and 2017-18 years. The recovery loans will be for terms of 10 years.”

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