What surging food prices mean for the economy (and flat whites) – Liam Dann
The surge in butter prices has raised that Kiwi classic of an economic question: why does dairy cost so much when we produce it here?
The answer is simply that farmers – or the companies like Fonterra that represent them – are always going to sell their products for the highest price they can get.
Why wouldn’t they? They’re businesses.
Ummmm, businesses that we have allowed to be a Monopoly eh Liam?
So the business we allowed to be a Monopoly can force us to pay prices that the Chinese Middle Classes can afford?
Is that what you are telling us Liam?
Why should we be forced to pay the same price as the Chinese Middle Class can afford?
The Chinese Middle Class is forecast to grow to 787 million!
Why are we paying a price that is imposed upon us by a middle class market that is many times larger than our total population?
Why can’t we eat the harvest of our own nation?
NZ’s food system in ‘disarray’, scientist says
New Zealand’s food system is in “disarray”, with major cross-sector challenges to resilience, a leading scientist says.
There was a growing need for a national food strategy to improve the country’s food resilience, Te Whare Wānaka o Aoraki Lincoln University Professor Alan Renwick said.
Food systems needed to withstand shocks from international conflicts or disasters, as well as deal with accessibility and health concerns, he said.
One example cited by Renwick was of price shocks during the Covid-19 pandemic.
He said food price inflation during that time was more severe and persisted longer in New Zealand than elsewhere.
That was partly to do with a food system that was very reliant on imports and a concentrated agriculture system, he said.
“The idea to me about food system resilience is we’re able to maintain good access to food for our people, at a reasonable price, even when these shocks come along.”
He said the rise in food inflation in New Zealand since 2021 had resulted in further challenges for families.
“We need to understand how our food system and supply chains differ from other countries. Is it that supermarkets have too little competition? Is it a consequence of our export-focused primary production that is detrimental to our food supply?”
We keep getting told we feed 40million, but that number is based on us selling milk powder as a base line ingredient filler for the manufactured food industry. The PR spin pretends it’s wholesome NZ cheese and milk and meat those 40million are eating when the truth is the vast majority of what we export is basic bitch milk powder used as a filler ingredient!
A recent report on food security found NZ had incredibly low food security because it was so open market driven and refused to subsidise farmers.
Which is where we on the Left must drive the debate.
We should absolutely consider subsidising food grown by NZ farmers and horticulturalists and our seafood and meat and dairy that generates a 15% price reduction for all NZ produce consumed here.
For growers we need to protect our most productive growing land for food by giving those producers tax breaks to ensure they can continue to feed NZers first.
Rebuilding a direct link between the harvest grown here, the people who grow it and a grateful local market who enjoy the product WITH a 15% price reduction.
Climate change will kill global free market supply chains, we are locked into hyper-regionalism. We need to build new economic structures, subsidising NZ kai for the domestic market would lock in certainty for producers while strengthening food security for the population.
We have to find new ways of working together to ensure we can survive what’s coming.
Fitch Ratings analysts warned NZ last month that the next 10 years of economic growth was dangerously stunted.
This matters because it is ratings analysts like Fitch who warn the market if we are good for all the money we borrowed.
They base that on future projections of our economic cycle and their analysis is terrible.
Fitch have made clear to us that Dairy, Tourism and exports to China have waned and can not grow beyond the manner in which we have already grown them.
We have allowed free market dynamics to be created where we as Kiwis are competing against far larger markets for the kai that was grown in our own country!
Why shouldn’t our children eat from the harvest of our own nation?
Why have we allowed the corporates to take the kai from our nation and make us compete against far larger markets who will pay more than the domestic population in NZ can afford?
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Out of idle curiosity, where do New Zealand’s food grains come from? Local or imported? Can the nation make this day it’s daily bread. . .
We have the climate to grow wheat but currently import 70% of the wheat we need, mainly from Australia.
Thanks Peter, much appreciated. I hadn’t thought it was that high a proportion.
Mainly Because NZ wheat is better for cake and biscuit baking and not for bread due to the moisture content I think it is. I work in a bread baking plant and I was told something like that 20 odd years ago.
Much of the imported grain (and PKR) feeds our chickens and cows.
Yay for our (so-called) clean green dairy industry.
New Zealand grain is selenium deficient.
Well we can grow oats here. Harraways have put in a submission against raising the levels of pesticides we will accept in our grains/plants because some a’holes are trying to increase that. Of course it’s not just ok to have higher nitrate levels in our water tables. Let’s f over the locals so some one overseas can stuff our milk powder in their food products
My early colonial relatives tried to grow wheat up Auckland way unsuccessfully.
Till recently most wheat grew in the Canterbury Plains now dominated by irrigated dairy herds, hence the ‘crop circles’ seen from descending planes. There is something about a type of grain developed for our conditions that is better for one use and not so good for another. Someone above has referred to that.
https://www.farmersweekly.co.nz/technology/canterbury-plains-could-lead-the-way-in-wheat-production/
May.8/2023 Ivan Lawrie, general manager at the Foundation for Arable Research, points out that New Zealand was self-sufficient in milling wheat until 30 years ago….
The warm aroma of freshly baked bread is hard to beat. But surprisingly, even though we grow 452,000t of wheat in NZ, we import about 70% of the wheat we use to make our bread from Australia. ..
A new agricultural model developed for the NZ arable farming sector looked at how to achieve this, with funding from the Our Land and Water National Science Challenge. Producing up to 700,000t of wheat is needed annually to cover current shortfalls and low production years, and meet dairy sector needs.
The modelling showed, at current yields (9.9t/ha), an extra 25,000ha are needed to achieve self-sufficiency in milling wheat for human consumption – an extra 250,000t. Widespread use of precision agriculture to improve yields (to 12t/ha) could see this drop to an extra 20,000ha.
From the environmental side, the modelling suggests that introducing this wheat production in a dairy system has clear positive impact, producing almost eight times less CO2-e biogenic emissions and using a third less water for irrigation than dairy.
The vast Canterbury Plains have some of the best arable soils in the country and produce most of the 425,000t of wheat grown annually in NZ. Along with plenty of growing expertise, this makes the region well set up for an increase in wheat cropping, Lawrie said.
Land could be freed up to accommodate extra wheat production as dairy farmers reduce stocking rates in response to freshwater and greenhouse gas regulations….
Now that’s a plan that a smart, advanced, responsible government and land technicals would set up. But what would our foreign owners think?? Better check out to see if they approve!! Duh!
Once again we have to put up with these bleating con artists
” Once again we have to put up with these bleating con artists ”
And their answer never gets challenged ! Its the same shit from every sector represenative who is asked to comment.
Yes Fonterra (Labour legislated virtual monopoly) has moral obligations to NZ it is keen to shirk, even selling its home brands now.
But the main issue is the prevention of local food supply in NZ.
All our regulations favour the big players, our slaughter and hygiene regulations are so over the top they stop small local producers from selling local killed meat or local made cheeses because of regulatory cost fir butchers or small producers.
This is where we could really make progress – notice in Italy and France you can buy local made cheeses, salami, even canned goods but can’t here?
Our regulations enrich the monopoly and oligopoly meat processing plants and dairy producer. Not to mention supermarkets.
We can have sensible food safety without the absolute bureaucratic zero sum safety police we have now.
Hear, hear.
NZ should create a chain of govt owned and administered supermarkets and clothing stores. Supermarkets sell only basic and healthy food / geared around operating at cost + 5% profit / pay no company tax / sufficient numbers to provide most citizens with most of their food / in store cooking workshops to demonstrate how to cook 10 nutritious and cheap meals with when cooked served to those watching etc. Expectation that most of population will buy at least some of their food and clothes etc there. Clothing stores sells basic but high quality clothes and shoes with the use of NZ wool / leather etc where possible and all school kids receive a full school uniform from this chain at the start of every year (and if they need additional elements during the year they are able to buy these themselves).
A supermarket selling healthy food would be avoid like the plague by many who servive on prepared over processed food and soft drink..
Your whole plan is great and in an ideal world would be a goer but you have obviously no background of dealing with the the public or how business works.
When I retired I worked with St Banadoes running a programme teaching basic cooking to young families in State homes in Chch. We provided the food elements and I drove to their homes . While a few were keen many would not be home for the appointment or would have slept in. In the end the plan was stopped as it simply was not supported.
Thanks for taking the time to respond to my idea Trevor and yup all fair points and I guess that those that don’t want to shop at such supermarkets don’t have to . . you can lead a horse to water and all that.
James Brown believes in fairies.
Farmers are milking us dry first, then exporting. Strict 5% profit on domestic dairy products. Then watch prices tumble.
Yes, te informer and when the farmers have droughts or disease outbreaks and any other disasters who pays for these, us taxpayers. And who is responsible and bears the brunt of our polluted water ways much of it caused by farmers effluent/runoff. Now why should we be subjected to international prices when we the taxpayer help the farmers in there many times of need, it is not fair.
‘where do New Zealand’s food grains come from?’
Our history shows we can grow every sort of grain crop(including rice). Economics is the reason we import wheat and barley from South Australia which has the dry climate necessary for good grain harvests.
Aotearoa’s first white settlers could not feed themselves in the first years after arrival and were provided for by Maori communities growing wheat, potatoes, maize, pumpkins and salting, smoking pork which was exported throughout the Pacific Islands and as far as California and the convict settlements of Australia.
Of course Maori communities still had land to do this then.
Absolute bollocks.
Well, that’s a well-reasoned response, full of coherent arguments – and completely wrong!
In the first years of the Auckland settlement the white colonists were almost 100% on the Maori farmers who supplied them with the necessary food.
Please connect brain with mouth before applying fingers to your keyboard (to mix a metaphor!).
Don’t come on here with that sort of reply kcco. If it’s wrong say what is, and give a reliable source so we can get informed. Capiche!
A dose of foot&mouth disease will very quickly reduce the price kiwis pay for homegrown as all exports will immediately cease.
Failing that, Precison Fermentation will eventually nail these disgusting freeloading polluters.
The price can only come down if subsidies are put in place, subsidies paid for out of taxation, so either way the consumer pays.
BTW. That’s a beef cow. Not a dairy cow so enjoy your burger now go for a dip.
Premium Steer 85% chemical lean my preference.
“So the business we allowed to be a Monopoly can force us to pay prices that the Chinese Middle Classes can afford?”
The Chinese middle classes get paid about a fifth of what the average New Zealander is paid. So we should be paying a lot less for cheese and butter than before.
And if they did not buy our dairy produce, we would probably soon be as poor as they are.
“Aotearoa’s first white settlers could not feed themselves in the first years after arrival and were provided for by Maori communities growing wheat, potatoes, maize, pumpkins and salting, smoking pork which was exported throughout the Pacific Islands and as far as California and the convict settlements of Australia.
Of course Maori communities still had land to do this then.”
None of these things were available in New Zealand until the first white settlers arrived. Everything you referenced was imported by those same white settlers. Not sure how Maori, who had never seen these things before and had no history of their cultivation, were able to feed anyone. Are you sure?
Yes Cook and early explorers introduced potatoes, pumpkins, cabbage, pigs, sheep, cows to New Zealand. Read an account of the early voyages by Beaglehole, and others – animals were specifically provided for this purpose. Peter Fitzsimmonds has a very readable account.
When Cook arrived on his third voyage he found plantations of cabbages and potatoes at river mouths on the Hauraki plains where Thames is now. This was all from seeds he introduced several years before.
When Charles Darwin visited the Bay of Islands in the early nineteenth century he remarked on the mill that was turning wheat into flour. Ruatara a Maori visitor to Australia had returned with wheat, turnips and other crops which quickly spread through Northland.
David Taiwhanga was selling milk, butter and cheese to crews of whaling and sealing vessels from about 1810 onwards. In the South Island cold weather crops provided a new food source for Ngai Tahu which they used to trade with Whaling crews.
Polynesians had a long history of food cultivation before travelling to Aotearoa. Adapting to new crops introduced by sailors or missionaries was no difficult for them
NOW THIS IS IMPORTANT so pay attention( I may set a test later).
Mass European migration to New Zealand came after the Treaty of Waitangi in 1840. Before that time only a couple of thousand Europeans lived in Aotearoa.
The New Zealand Company settlers struggled to clear bush to grow food. Most of the migrants lacked experience in this respect. Their accounts given in the Oxford History of New Zealand and elsewhere show they were dependent on trade with Maori for food. It also explains the settlers desire to seize prime agricultural land from Maori which led to warfare.
The history of human settlement in this country is a huge topic and I could not hope to cover it here. Suffice to say that your comment shows the general neglect of anything that speaks of Maori achievement because it challenges the colonial view of how white people civilised and tamed this country. Try not to be so fucking racist and do a bit of reading.
Oh blow, someone attempting to put the invaders POV. How lucky for Maori to get the commercial input and new goods available from the unsettlers that arrived. They could have been good if the new people didn’t attempt to put mantrap equivalents up in various ways so that Maori would be kept in a subordinate place.
Maori have spirit, a fighting spirit, the alcoholic spirits that settlers brought with them nearly wiped them out, but not quite – good try though. You don’t find your way across windblown seas relying on your wits, strength, cohesion, planning. and nurtured knowledge to be finished off easily.
Come in to Kiwiland and made your nest have you leb? The easy way to the middle class nirvana now available.
“All this money we get from these exports doesn’t seem to be making it easier for those at the bottom of the socioeconomic ladder…”
True, and that’s because there is no “we” in all of this. The idea that NZ is a country with a shared national interest is a fiction. There is no ‘country’ in that sense, just a location where markets operate and business activity occurs.
Cold reality AB. It’s not much fun, I want a better story. Let’s make a tv series like AbFab and get some laughs from deliberately humourous women.
https://www.youtube.com/watch?v=Ms9LQAZ-siU AbFab 3m – Absolutely Fabulous and Patsy Stone
It is important for our mental health that when confronted with stark facts about Kiwiland and our economonstrosity that we instantly stuff some other thought over the gaping wound.
” True, and that’s because there is no “we” in all of this. The idea that NZ is a country with a shared national interest is a fiction. There is no ‘country’ in that sense, just a location where markets operate and business activity occurs ”
100% nailed it AB.
Income from the export of commodities needs to be taxed at a higher rate than value added, branded, agri products.
Incentivise exporters up the value chain, increase employment and produce more table ready products for locals.
Costco. Butter $9.99 a kilo!
I don’t know where people are buying their butter, but Pak n Saves butter is cheaper than that yes it has gone up from $6.69 to 8$ but it’s still cheaper than $9.99
A kilo? They sell 500 gm packs which are the metric replacement for a pound of butter. I have not brought dairy products for decades so I can’t guarantee that I’m correct although I’m fairly confident.
I probably wouldn’t mind paying the same as a middle class chinese for my dairy, beef, fish, kiwifruit, and so on.
But the simple fact is we pay far more even though the domestic market typically is dumped with goods not of acceptable quality to be exported.
I have worked across many of the major exporting countries in NZ, and without exception the NZ market subsidises the export market. It is the kiwi way, take the path of least resistance.
That is why you never see the domestic market results in any annual report. NZ is always lumped in with other countries as a “region”.
Kiwis would be horrified to know we are subsidising Air NZ’s international business, which has never made a profit and never will. Along with Fonterra’s export markets, our seafood which goes offshore for $1 per fish meal, and on and on.
Every company based in NZ who exports price gouges the domestic market and subsidies the export market.
Even though the domestic market is generally 5% or thereabouts.
You are so true. My friend was a butcher’s daughter who worked in a Countdown deli and she was always saying about the comparatively crap meat that would be sold compared to what was exported.We are far too nice as a people: we will bitch about it between ourselves but still buy it without more protest than a grizzle.
The urban myth surfaces yet again.
Bet you are a city/town person – the urbanist miss again with you bob1st bobbing up and down like a real corker. You are a great example of a vitrified brain retaining enough levitation to rise randomly from its deep pool of sludge. Science should study this anomaly.
Well that’s a coincidence, apart from my tertiary qualifications in commerce I also hold tertiary qualifications in science.
How many small NZ businesses aren’t going to survive these price hikes? How can we pay more for a product than one that has traveled 11,160 kms distance? Does Fonterra get airpoints?