Foreign companies driving milk price debate, say farmers

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The current debate over high milk prices for consumers is being driven by overseas owned dairy companies who are not even involved with domestic milk supply, says a group of Fonterra dairy farmers.

"It is clear that if the domestic milk price in New Zealand was too high, more companies would have attempted to get involved in the market rather than exporting all of their milk to foreign markets where they make higher profits," Fonterra Shareholders Council chair Simon Couper said.

The council's comments come following the Commerce Commission's announcement last week that it is considering an inquiry into whether the price of milk should be regulated.

Milk prices have risen about 10 per cent in a year.

Fonterra and Goodman Fielder are the main distributors of dairy products in New Zealand and have a roughly equal shares of the market, according to a report from the Ministry of Agriculture and Forestry.

Couper said foreign-owned companies were cynically using the public's emotion during a tough economic period for their own gain.

"They are pressuring the New Zealand Government and legislative environment in an attempt to cling on to their access to buy milk off New Zealand farmers at a regulated price, then export the milk and the profits off-shore.

"What they are failing to point out is that the industry was structured by government to ensure domestic milk supply to New Zealanders at competitive prices as well as fair returns to farmers. This allows plenty of competition at the farm-gate."

The majority of dairy farmers wanted to stay with Fonterra because the co-operative model was strong and sustainable, he said.

Dairy companies with foreign ownership were using their New Zealand partners to put pressure on the government for their own ends, putting the growth of the New Zealand dairy industry at risk, he said.

This would impact on every Kiwi as all the profits made by Fonterra were paid to its farmers in New Zealand, he said.

"These companies are concerned because they are losing farmers to Fonterra as their suppliers see much more strength and sustainability in the Fonterra model.

"Fonterra farmers appreciate the benefits of owning the New Zealand company they supply which is also providing the best farm-gate milk price based on sound export performance.

"This is a much better position to be in than being at the whim of foreign-owned companies only interested in getting their milk for the lowest possible price and then exporting the profits off-shore," said Couper.

- NZ HERALD ONLINE