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Politicans sniffing electoral support are now pushing for local dairy price investigations in the wake of the Commerce Commission ruling out an inquiry
Despite all the claims and silly political games surrounding domestic milk prices the much anticipated report by the Commerce Commission has found retail and wholesale markets are competitive enough and do not require price controls.
Unsurprisingly, in a bid to make political capital, Opposition leader Phil Goff says the commission’s decision not to investigate milk prices further was “hugely disappointing”. He says Labour will be pushing for a select committee inquiry.
“We need to know why the price of milk in New Zealand is so high when we’re the country that produces it.” Which probably says more about Labour’s and the former international trade Minister’s lack of economic nous – than its nutty no GST on fresh fruit policy – when failing to acknowledge the impact international supply and demand has on local dairy prices. And, speaking of nuts, Green Party MP Sue Kedgely claims the Commerce Commission had “passed the buck” and it was up to Parliament to resolve “the issue of the virtual monopoly Fonterra exercises in the domestic milk market and the effect this has on milk prices”.
Meanwhile back on planet earth, the commission’s report – sparked by skyrocketing domestic milk prices and similar political grandstanding earlier this year – ruled out price controls, saying enough rivalry exists between the two main supermarket chains while for wholesale milk Fonterra and Goodman Fielder competed for supplies. However the commission said there was “little or no competition” in the market for supplying milk to processors which is dominated by Fonterra. However, the political games have not ended with Agriculture Minister David Carter – with a clear eye on the upcoming election – saying he cannot assure New Zealanders they are not paying too much for milk despite the Commerce Commission’s report. This followed Prime Minister John Key’s similar utterance in the aftermath of the commission releasing its decision. It’s obvious that Carter and Key are not immune to the same kind of grandstanding over domestic dairy prices that the increasingly irrelevant and desperate Goff and ever irrational Kedgely are.
Politics aside, I tend to agree with Fonterra which claims its competitors are behind the calls for a price control inquiry. Chief financial officer Jonathon Mason says they want to force down the amount they have to pay New Zealand farmers for raw milk. He was quick to put the boot into foreign owned-rivals like OCC and Synlait who led the calls for an inquiry.
“If some processors are not doing as well as Fonterra, that’s because Fonterra makes more from a bucket of milk than them – by doing what it was set up to do. As a co-operative owned by Kiwi farmers, all that value flows back into the New Zealand economy.”
Ouch!
It is just a pity the Fonterra man is not as honest and blunt with all those politicians currently clambering over local dairy prices in an effort to make themselves more electorally palatable to voters.