Milk buyers urged to shop around

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Milk buyers are being advised to shop around for better deals to avoid being victims of supermarket price gouging.

Parliament's commerce committee today (Thursday) began hearing evidence for a milk price inquiry, which was launched in response to public concerns after the Commerce Commission decision not to investigate the issue.

In a submission to the committee this afternoon, the Dairy Workers' Union said Fonterra's competitors were attacking the farm gate price because they wanted to see it reduced, and the inquiry needed to look further down the supply chain for who was responsible for excessive prices.

"That huge variety (in prices) suggests to us that some outlets are creaming it at some times,'' national secretary Peter Ritchie told the committee.

"The high variability reflects the fact that there is quite considerable price gouging.

"If there is insufficient competition within the supermarkets, then I think there is an obligation on Parliament to find ways in which the consumer is delivered affordable dairy products.''

Ritchie said there needed to be more transparency about the retail and wholesale margins to stop shops over-charging, and commercial sensitivity issues would have to take a backseat.

"When the consumer sees that there's excessive price gouging in a particular area of the supply chain then the consumer can put some pressure on there,'' he said.

"That may be all that it takes, or it may be that Parliament has to think about what is excessive profiteering and what's not and regulate along those lines.''

Speaking outside the committee, Ritchie said he supported the inquiry, and that it was long overdue.

"It's not just about the price of milk, of course, milk is a symbol for New Zealanders' concern about the rising price of food generally,'' he said.

"Low income families can no longer afford basic essentials, that's a disgrace in this country, which is basically awash with milk, and so we're looking for a domestic pricing model in this country in return for the considerable investment taxpayers make for the New Zealand dairy industry.''

Federated Farmers' dairy chairman Willy Leferink also spoke to the committee about the varying prices at different shops, saying better deals were available for those who looked around.

"We can buy milk, four litres for $5, in my home town $2.69 for two litres,'' he said.

"I think the consumer has not utilised its power to shop around.''

Green MP Sue Kedgley said there was some concern around Fonterra controlling the price setting process, and asked whether it would be better to have an independent organisation setting prices.

"I can't think of anywhere else in the New Zealand economy where the monopoly supplier of a product also sets the price, and in secret,'' she said.

Leferink said he had seen the way Fonterra calculated price, and that setting up an independent body would be duplication.

Leferink maintained the committee's inquiry was unnecessary.

"The fact is MAF (Ministry for Agriculture and Forestry), the Ministry of Economic Development and the Treasury are doing work that could vitally inform any future select committee,'' he said.

"We welcome all scrutiny, we've got nothing to hide on milk prices, but we feel that this inquiry's not necessary because we feel that the price is set right,'' Leferink said.