KEY POINTS:
Maybe our dairy prices aren't so bad after all. Checks on the price of milk show that despite a big increase in local prices, New Zealanders generally pay less than people in other Western countries for dairy products.
Prompted by claims from independent MP Gordon Copeland that NZ
shoppers pay more than those in other Western countries for their milk, the Weekend Herald compared the price of the dietary staple and other shopping basics with stores in Australia, the United States and Britain.
These inquiries found that although the cost of two litres of locally produced milk increased by nearly 25 per cent and butter's price went up almost 90 per cent in the past year, New Zealanders still paid less for these products than people in the countries surveyed, or were on a par with them.
The cheapest two-litre container of milk in New Zealand costs about $3.10. Australians pay roughly the same - $2.95 to $3.21 - but Americans, who can get their milk in half gallons, pay $3.49.
Butter-loving New Zealanders miffed at the rising price of the spread should consider homesick Kiwis in Britain - there, 500g of Anchor butter costs $5.44.
The cost of a 1kg block of Kiwi cheese ranged in price from $10 to $17; Australians are paying close to $12 for the cheapest cheese,, and Britons pay more than $14.
Mr Copeland says the local price of milk should be "comfortably below" the price charged overseas. He said oil-exporting countries had cheaper petroleum products for their domestic markets, because they did not have the cost of freight, insurance and tariffs, and he thought the same rationale should apply here for dairy products.
"I've tried to look at the big picture and say 'does this give me comfort in thinking we're paying a fair price in New Zealand ?' and I've come to the conclusion that we are not."
Mr Copeland said he wanted the Government to have the Commerce Commission undertake an inquiry into what he called anti-competitive practices in the dairy industry.
He said dairy farmers had approached him with their concerns, citing retailers' margins as the reason for high milk prices, but many were too afraid to go public.
"You're in business in the dairy industry and are a competitor with Fonterra but are reliant on Fonterra for your raw milk so you're very limited in your ability to go public with your information," he said.
But Fonterra Brands New Zealand's managing director, Peter McLure, said the dairy giant was not responsible for setting retail prices.
The company's own margins had suffered because of widespread increasing costs.
"We haven't been able to maintain them and we've had to pull them back in this environment and have had to absorb some of these increased costs."
He said Mr Copeland's initial figures were "extravagant" and did not account for GST.
"I'm not sure if these figures were not done with much rigour, when you consider that there's GST on one and not the other."
Mr McLure refused to provide a breakdown of the cost of milk.
"We are not going to share our cost structure with our competitors, and we don't particularly want our customers to know what our cost structure is as well."
The results from a Consumer's Institute investigation into how Fonterra operates are expected to be published next month.
