Clinton Beuvink: Better to act than cry over price of milk

Clinton Beuvink founded Nosh Food Market. Photo / Sarah Ivey

Opinion

I am a New Zealander and I feel a strong association with milk. As a child I grew up with milk always being in the fridge.

My first job was as a milk delivery boy. From memory milk was 20c a bottle. I got a special HT licence to drive a milk truck when I was 17, then spent years delivering milk to New Zealand households.

I bet most people can't even remember the milk truck and the milkman - most Kiwis now buy their milk at the supermarket.

To me, milk is a unique product. My children pour milk on their cereal every day. How do you explain to a child that there is no milk for their cereal because you can't afford it? What else do they pour on their Weet-Bix?

I see advertising on TV that tells me that we lead the world in dairy products. I learn we feed more than 100 million people with our milk. The message is that we achieve this because "Kiwis make the difference". I believe we do produce milk with incredible efficiency. We are blessed with fantastic land, a great temperate climate and clever farmers who work hard.

So why is it that we pay more for milk than comparable countries such as Australia, England and the United States? As a retailer I wanted to start the ball rolling. I could make a big contribution to lowering the price of milk by taking a stance on not making money on it.

Yes, it means we have to make money elsewhere, but consumers can look at the prices we offer on other products and decide if we are competitive. They have choices and they can decide. Take fruit - if bananas are not on special, you can buy apples. With milk, people have no alternative and it seems those in the milk industry know it.

Competition in milk production is low and there are barriers to entry. The raw supply is predominantly controlled by one entity. The processors are few and the demand is heavily dominated by the two supermarket chains - and as a result they get the best prices from the processors.

And no, the two dominant retailers don't promote 2-litre milk. I believe these retailers are generating mark-ups of more than 30 per cent on milk. This is unbelievably high for a supermarket line.

If we are one of the most efficient producers of milk in the world, we should have the lowest domestic prices. We have the opportunity to set the standard internationally by making this essential product inexpensive and accessible for all New Zealanders.

Nosh has been discounting the price of Cow & Gate milk to $1 a litre in its stores. We have since extended the offer until the end of this month. The response has been incredible.

The feedback from our customers has been overwhelmingly positive. New Zealanders want a fair deal on milk. Why can't we as New Zealanders benefit from a product where our nation has a competitive advantage?

The reaction from farmers has been encouraging. Federated Farmers dairy chairman Willy Leferink gave his full support to our campaign. He is quoted as saying "the focus needs to be on supermarkets because if dairies sell milk cheaper and a small supermarket like Nosh can sell it as a loss leader, surely Foodstuffs and Progressive can do the same".

It seems our farming community would like to see New Zealanders drink more milk too - it's good for our health and for our economy.

I firmly believe that if the price is lower, more Kiwis will drink more milk. I am confident that if the retailers do their bit, then so will farmers. If all parts of the industry help out and limit their margin expectations on milk locally, then $1 litre milk is sustainable for all Kiwis.

I hope other retailers will follow suit by reducing margins and making milk more accessible. If the feedback from our customers is any indication we know that New Zealanders permanently want this change.

Milk is a product without equal - and right now it is the proverbial cash cow for all involved. It appears the large processors of milk aren't supportive of cheaper milk either, so we have started looking for a new processor and will probably have to create our own brand. This will help us to reduce costs and keep retail prices down.

I am committed to bringing cheaper milk to New Zealanders. We don't have an alternative to milk. If you can't afford to buy it, what do you replace it with? Milk consumption per person is declining to the detriment of our health and I believe this is directly related to high prices.

To me, it's simple - I urge you to take some time to think about it: The price of petrol in Saudi Arabia is around US$1 gallon. And yet it's $4 a gallon in the US. Why can't New Zealanders have the benefit of our own white oil?