Reserve Bank Bulletin looks at dairy sector vulnerabilities

Release date
15 December 2015

The Reserve Bank today published a Bulletin article, ‘An updated assessment of dairy sector vulnerabilities’.

The article investigates the severity of cash flow pressures currently facing dairy farmers, and assesses the potential financial stability implications if the payout remains low for an extended period. The article estimates that around half of dairy farmers are now facing a second consecutive season of cash losses, placing the sector under significant financial pressure. The authors find that the majority of farms would remain viable in a sustained low payout environment, although some highly-indebted farms would face considerable difficulties. Losses for the banking system are estimated to be manageable even under a severe stress scenario. 

More information: Reserve Bank Bulletin

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