FARMERS in New Zealand, the world’s largest dairy exporter, are reining in milk production as a flood of supply from Europe and the United States pummels prices, a sign the “white gold” rush that has fuelled the New Zealand economy for years is over.

    Last season’s record-high prices have fallen well out of reach as the supply glut and a slowdown in buying from China and Russia batter New Zealand’s largest export industry.

    New Zealand dairy cooperative Fonterra Cooperative Group — the world’s biggest dairy processor — is expected to cut its farmgate milk price forecast yesterday to a six-year low of less than NZ$5 (US$4.20) per kg of milk solids, from NZ$5.30 currently.

    In a huge blow to farmers, economists expect the new price to fall well below the average cost of production and will knock around NZ$5.5 billion from New Zealand’s US$180 billion agriculture-based economy.

    “What we’re going to see is quite weak trade numbers over the next six months or so as the price fall to date comes through the official data, and that will show up in the current account and the terms of trade,” BNZ economist Doug Steel said.

    Steel said, however, that it was too early to detect a fall in annualized production.

    Lower output may mark the end of a six-year, China-driven boom during which both prices and production hit record highs. The dairy industry last year accounted for about a third of New Zealand’s economic growth and about a quarter of its exports.

    Farmer Willem Stolte says production at the farm he runs with his son Clarence near Wellington has fallen 8 percent so far this season, starting in June, as they milk fewer cows.(SD-Agencies)