Fonterra’s board meets today to revise its forecast farm gate milk price.

That revision will almost be downwards and it may well be substantial.

With the final pay out plus dividend for the just completed season expected to be between $4.60 and $4.70, it is possible this next season could go down almost to $3.00.

That has the potential to dramatically change the political dynamic.

Almost anticipating that, Labour’s former Leader, David Shearer, now Consumer Affairs spokesman, yesterday went into bat on behalf of dairy farmers.

With dairy prices forecast to take another hit today, banks shouldn’t be too eager to put the screws on farmers,” he said. 

“Bank profits for the four Australian owned banks – ANZ, Westpac, BNZ and ASB – hit $4.4 billion after tax last year, double the profits they made 10 years ago.  

“That’s a before tax profit of $1,354 for every man, woman and child in New Zealand. 

“No other sector has been able to make that sort of return.

“It’s only right that banks should trim their profits now to allow our farmers to ride out the dip resulting from falling international dairy prices. “

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Though this statement seems directed at the banks it is just as likely to also have been aimed at New Zealand First who have been trying to carve out a political niche as the “provincial party”.

Last weekend at the party’s conference in Rotorua, its leader, Winston Peters, was also on the offensive against the banks.

“Underlying the financial problems in the dairy industry is the deep concern that many farmers are going to the wall<” he said.

“This dairy farmer disaster is happening in an environment of deliberate false optimism masking the real facts.

“Bank economists bore the population witless on TV, night after night, with self-centred, egregious predictions.

“They know that telling New Zealanders how dire “the pay-out will be” for farmers will cause panic.

“They prefer predictions for farming receipts grossly out of date as they speak.

“The per kilo dairy price is going to go under four dollars in a climate where dairy farmer budgets were based on at least $6.50 per kilogram.

“The profiteering overseas-owned banks are already closing down credit lines for many farmers.”

 “This means farmers being forced off the land and their farms snapped up by foreign interests.”

This competition between New Zealand First and Labour for what they assume will be an increasingly angry rural and provincial vote is likely to intensify as the year progresses.

National’s approach so far has been to point out that other agricultural  products — apples, kiwifruit, wine and red meat — are not facing the same price fall as dairy.

But even so, there is among several of National’s rural MPs a concern about Fonterra.

They are asking whether it has the right governance and management to confront the challenges it now faces.

The next big economic event after today’s announcement will be the Reserve Banks September 10 Monetary Policy Statement which is sure to include a downwards revision of its growth forecasts and another drop in the official cash rate.

Don’t be surprised if the Government’s critics start trying to tell it the rock star economy concert is over.