Attempts to eradicate the cattle disease Mycoplasma bovis will continue, the prime minister has announced.
Prime Minister Jacinda Ardern has just announced the decision about whether to eradicate or contain the disease at a special post-Cabinet press conference at Federated Farmers' Wellington headquarters.
It will be a phased eradication, planned over the next one to two years, and will cost about $886 million.
The disease was discovered in July last year and since then 41 farms have been confirmed as infected. That has since dropped to 37 farms, with more than 11,000 cattle slaughtered.
The bacterium causes illness in cattle, including udder infections, abortion, pneumonia and arthritis.
It does not affect humans and MPI said it presents no food safety risk.
The eradication plan will involve culling all cattle on all infected properties as well as cattle on any 'restricted' properties.
After the cull, farms will be disinfected then lie fallow for 60 days, after which stock can be returned.
The Ministry for Primary Industries will continue to trace all potentially affected cattle, testing and culling any herds with infected animals.
Of the total cost, $16m will be from loss of production and will be borne by farmers. The vast majority - $870m - covers the cost of the response, including compensation to farmers.
The government will meet 68 percent of this cost, with Dairy NZ and Beef and Lamb picking up the rest.
The alternative of long-term management would have cost about $1.2bn.
Ms Ardern and Primary Industries Minister Damien O'Connor said the government has "one shot" at eradicating a disease that causes a "painful, untreatable" illness in cattle.
"This is a tough call - no one ever wants to see mass culls, but the alternative is to risk the spread of the disease across our national herd," Ms Ardern said.
Dairy NZ said it supported the decision.
Chair Jim van der Poel said farmers had been waiting nearly 11 months month and "part of the challenge" had been a lack of certainty about what was going to happen.
"We know that moving towards eradication will be a devastating decision for some [as it] will mean that thousands of animals will have to be culled."
Dairy NZ would be there to support each individual farmer affected.
Earlier today, Agriculture Minister Damien O'Connor said there were "hard calls to be made", no matter what the government decided.
"The industry knows this and [it] realises that the decision will be the best one for their long-term interests and future generations in farming."
Farmers who RNZ has spoken to are dvided about the best way to handle the disease, with some saying containment was the only realistic solution.
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