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Interest Rate Hike A Blow To Dairy Farmers

Interest Rate Hike A Blow To Dairy Farmers

Today's quarter-point interest rate rise will cause more pain for dairy farmers already facing the prospect of sharply lower incomes next season, said Kevin Wooding, Chairman of Dairy Farmers of New Zealand (DFNZ).

The increase in the official cash rate to 5.25 percent will add to borrowing costs, and most analysts say it will put more upward pressure on the New Zealand dollar. A sharp rise in the kiwi dollar slashed $350 million from half year revenues of Fonterra Co-operative Group in its most recent half year.

Mr Wooding said he appreciated that the central bank was independent of government and had a hard task. It was trying to put the brakes on domestic consumption which would help stop inflation rising above three percent, the upper limit of its target band.

"The government says there is nothing it can do about the rising kiwi dollar. That is only half true. Local and central government can play a significant role in keeping inflation in check.

"One of the things they must do is stop piling more costs on to farmers and other New Zealanders. Since it came to power the Labour government has added 20 new taxes, while local authorities' rate increases consistently beat inflation," Mr Wooding said.

DFNZ is an industry group of Federated Farmers of New Zealand, New Zealand's premier rural organisation with more than 18,000 members.

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