Meat and wool farming does not have a future unless urgent action is taken, desperate South Island farmers have told a parliamentary select committee.
They have called for an urgent inquiry into the impact of monetary policy on exporters, particularly farmers, and to look at solutions.
Marlborough Federated Farmers president Geoff Evans and senior vice-president Peter McPartlin told the Primary Production Select Committee yesterday meat and wool farmers were in depression with many facing the loss of their properties.
He highlighted a letter from PGG Wrightson, co-signed by its board including Craig Norgate, to its clients that said sheep farming was no longer profitable.
"Farmers are exiting the industry in large numbers, with the result that its very sustainability is in doubt," the letter said. "This is occurring despite a global boom in agriculture.
"This situation for an industry at the heart of New Zealand society is unacceptable."
Evans said the main cause was the overvalued exchange rate, driven by the highest interest rates in the developed world.
The 2007 MAF Pastoral Monitoring Report had underestimated just how disastrous present economic conditions were for sheep and beef farmers because MAF had used a $NZ1 to $US70c exchange rate.
The drought and change of land use had also made many prices much lower than those used by MAF.
Evans said farmers could deal with drought if they had the money to do so - it was the ongoing poor returns that were the problem.
He said sheep numbers were down to 38.6 million - the lowest since 1955 - and infrastructure in decline with stock sale yards falling into disuse.
New Zealand was losing much of its harder hill country, which had produced many billions of dollars, he said.
On better land farmers were changing to more profitable dairying, viticulture and cropping.
But this was not possible for some farms and competition for labour and water made sheep and beef farming difficult.