Federated Farmers believes American dairy farmers have nothing to fear but fear itself, if New Zealand and United States enter into a free trade agreement.

"There's been a stir among American dairy farmers because talks on the Trans Pacific Partnership Agreement have started in Melbourne," says Federated Farmers Dairy chairperson, Lachlan McKenzie.

"They're scared a free trade deal could flood the United States with cheap New Zealand dairy products and they're worried they can't compete. American dairy farmers need to get with the program that free trade will make them more competitive.

"Why would we want to sell cheap products anyway? We want to maximize our return and we have no desire to undersell the market.

"I think this needs to be put into perspective, New Zealand may be the world's second largest dairy exporter but we only produce about two percent of the world's milk. We're a little island in the bottom of the Pacific and America's scared of us. It seems a bit strange.

"I think they're threatened by how efficient our dairy farmers are. They find it very hard to understand that farmers here can work without any subsidies while they cost the average American family US$322 every year at the checkout.

"It's sad that the dairy farm lobby cannot see that these subsidies are not helping them and that protectionism is not the way forward.

"While many of America's dairy farmers are hooked on a subsidy drug, we're seeing the emergence of an enlightened group of dairy farmers who realise dairy subsidies are completely unsustainable. They're the people we want to do business with.

"America may be the land of the free, but their dairy market is anything but," concluded Mr McKenzie.