Progressive joins milk price freeze

Photo / Thinkstock

Countdown, Woolworths and Foodtown supermarkets have pledged to freeze the price of milk for the rest of the year.

The pledge follows Fonterra's announcement on Friday that it would freeze domestic milk prices until the end of the year after widespread criticism that milk had become unaffordable for many families.

Countdown Supermarkets spokesman Luke Schepen said its price freeze would cover all Countdown Supermarkets nationwide, as well as Woolworths and Foodtown supermarkets, which all came under the Progressive Enterprises umbrella.

"Whether our customers are after full cream milk, lite milk or trim milk, the prices will be staying down," Mr Schepen said.

He congratulated Fonterra on its decision and said the company would absorb any increase in supermarket costs.

However, the dairy co-operative's decision has baffled some in the dairy industry, who say it is unnecessary and could "end in tears".

"I'm scratching my head to understand why Fonterra would do it," Federated Farmers dairy spokesman Lachlan McKenzie told NZPA.

"It won't cost Fonterra anything, it'll cost the owners and farmers that supply Fonterra.

"If they sell milk for a lower price then farmers get less money for it."

Farmers were not making as much money as some people thought, Mr McKenzie said.

"The current high milk prices has many thinking that farmers must be creaming it but we're not.

"Most dairy farmers, myself included, got less than $0.60 for a litre of milk last season. From these 60 cents, we had to pay all the costs of production, including, wages, vets, tax, as well as paying the mortgage."

The real solution was a true unbundling of the retail margins involved in primary produce, and that needed to be driven by the Government, Mr McKenzie said.

- NZPA