Prime Minister John Key says that around 10 per cent of dairy farmers could be forced off their land. I think Key's numbers are on the low side.
If the milk payout forecast remains at $3.90, and this looks decidedly possible for some years, and with DairyNZ analysis showing the average farmer needed a milk price of $5.40 to break even, it's easy to see many more than 10 per cent of farmers "going to the wall". In the UK they're predicting one in five farmers will walk off the land.
Dairy farmers hold $40 billion of debt, and sooner or later, if they default on that debt, the banks will move. The Reserve Bank put potential farm failures at 44 per cent as a worst-case scenario. The potential for many foreclosures then is dire.
Ride to the rescue Labour leader Andrew Little. He has called for the banks to be "stiff armed" into not forcing dairy farmers off their land because he's worried that farms will fall into overseas ownership. Yes, Little is back onto his anti-foreign ownership twaddle. As for "stiff arming" the banks - I have no idea what Little plans, but dairy farmers loading themselves up with debt wasn't mandatory. They weren't forced to take big loans out.