White gold!
The Commerce Commission is expected to release the findings of its investigation into pricing of milk on the local market within the next month or so.
Its investigation will not lead to any inquiry into the domestic milk prices and nor should it.
Unfortunately, this whole ‘milk probe’ saga has been a bit of beat-up from day one. It’s been fanned and promoted by the likes of Consumer NZ and various media outlets.
Consumer NZ says it backs calls for an inquiry because 91% of respondents to a survey it conducted think they are paying a high price for milk. That result is hardly surprising. Any ‘survey’ of consumers asked if they’re paying too much for something would say they are. But that is no reason to hold an inquiry.
There is little doubt milk price increases are making life tough for local consumers. But the problem is straight forward – it’s just a reflection of international markets. However, the proponents for a price inquiry have not let too many facts get in the way of their story. They have consistently either failed – or refused – to accept the rise in domestic retail prices is linked to global markets paying near-record prices.
Perhaps these whingers – as Paul Henry would say – should start a group, or even set up their own Facebook page.
The reality is milk in New Zealand is actually cheap and represents good value for money. It currently retails from between $2.10 to $2.40 a litre and is packed with vitamins and minerals including: calcium; phosphorus; magnesium; zinc; Vitamin A and B12, to name but a few. All those concerned about milk prices should pay a visit to a health food store or pharmacy and see how much this lot would set them back – before complaining about the value of milk!
These same consumers should also look at what they’re actually putting in their shopping trolleys – before blaming Fonterra, dairy farmers and/or supermarkets for their growing budgetary problems.
A recent MAF report, on domestic milk pricing, found average weekly household spending on fresh milk in the year to June 2010 was $5, compared with $4.60 in the year ending June 2007.
Meanwhile, “for comparison”, the same report found that – during this same period – the average spent on soft drinks went up from $2.70 to $3.30 a week. Despite the somewhat peculiar comparison – of unhealthy, sugar-laden soda water with very healthy, mineral-rich milk – the fact is New Zealand shoppers have happily shelled out more for increases in soft drink than milk. Yet we have not heard any consumer lobby-led outcry into Coca Cola’s pricing policy.
Unfortunately, claims about over-priced milk on the domestic market were swirling around for a month or two before Fonterra actually decided to front-foot the issue. This left a vacuum that self-serving politicians and media types happily filled with misinformation and baseless claims about milk prices.
Somewhat belatedly, the diary giant rolled out its outgoing chief executive Andrew Ferrier to fight the good fight. His explanation was simple, but effective.
“Milk prices always track the world market … the reality is it’s a cyclical market. The world is buying dairy products on that market and New Zealand is no different from anyone else in the world.”
And dairy products are very hot right now. So hot – in fact – that during March Fonterra recorded its highest ever month of exports with 229,000 tonnes shipped around the globe during the month and earning the country $1.2 billion in much-needed export earnings.
That’s something all New Zealanders should be celebrating – especially when the country is borrowing $300 million a week to pay its bills!
In the meantime, I note that petrol prices are at record levels. Perhaps all the potential fans of the ‘Subsidise Local Milk Prices Now’ Facebook page could insist the Commerce Commission to carry out an immediate investigation!