Fonterra boss blames soaring butter prices on global demand
The head of Fonterra says he understands consumers’ frustration about the price of butter, but the co-op has to deliver for farmers.
In its third-quarter update, Fonterra’s profit for the nine months ended April rose 11 percent to $1.08 billion (or $1.16b excluding one-offs), driven by strong demand.
But the same demand has meant soaring prices for household staples like butter.
Recent Stats NZ data showed food prices rising at their fastest rate in more than a year, with butter prices up 65 percent.
Fonterra chief executive Miles Hurrell said prices were driven by global demand.
“We’re a collection of 8500 small farmers and our job is to deliver for each of them,” Hurrell said. “The international market is pushing these prices very high at the moment and our job is to reflect that in the returns that we give back to our farmer owners.”
Bullshit! Bullshit! Bullshit!
We created a monopoly in the form of Fonterra to maximise price negotiations on the global market, but the flipside of that is that me as a consumer in NZ, for a product made in NZ, I’m competing with 500 million middle class Chinese who want this product.
NZ only has a population of 5million, we can never compete for price against 500million middle class Chinese.
On top of that, this butter is created by a cow which takes water, pollutes water and generates climate warming emissions.
So this product, that I’ve already paid an environmental price in manufacturing it, also costs me an arm and a leg price wise. because I’m competing with 500million middle class Chinese.
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?
I’m sick of Fonterra’s excuses.
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Not wanting to put too fine a point on it, butter is bad for you.
Yes, just like this government and the support it gives to this monopoly.
So squeaky, are you going to stop eating butter like any sensible person or not?
Some would say the war on saturated fat is misaligned, that salt, sugar and the thousand and one other chemicals that go into processed food are the real culprit. Having said that I’m not heading to Kentucky Fried any time soon.
“Not wanting to put too fine a point on it, butter is bad for you.”
No it isn’t. Margarine is probably worse. And it is not so much fat that causes obesity and other health problems, but sugar.
National give the poorest $7 a week but it’s $8 for the cheapest butter… go fuck yourself National!
Most TDBers drink 100% pure Soy milk. Or almond milk, All are ready for some sort of disgusting lab-made chemical laden franken-food. This is YOUR time to wean yourself off the industry you all despise so much, Right?
We need the butter price to stay high so the farmers can continue to attract and pay the amazing Filipino dairy workers. Our town is now pumping with the vibrancy of hard-working-family-oriented Filipionos. Basketball on Friday night is heaving as all the familes come along. Hard working & happy & law-abiding is a great trifecta.
Another example of exploitation .There should be no further imports of people to be exploited because for years you have failed to train the next generation and pay them well .As an ex farmer I have had first hand experience and through my grand kids school meet farm workers every day that are never going to progress to farm or home ownership .And yes they also play net ball and rugby when they can get time off the farm to do so .I know of one who had his pay docked because he was coaching a school rugby team even though his partner covered the time he was off the farm .
Years ago I asked the meat producers organisation why People here had to up to $20.00 a kilo for lamb. Their answer was that the domestic prices had to match overseas prices.
Iran is a major petrol producer. Do Iranians have to pay as much for petrol as the countries they export to? Is that also true of citizens of the United Arab Emirates, Libya? ( average about $0.30 cents)
Is it possible that there are countries that do not slavishly follow the free market ideal we do?
Now at this stage I’m right will shout about evil, repressive regimes(true) and Bob the First will say I’m stupid or pathetic (but not say why) but neither will actually stick with the subject under discussion which is why do we have to pay such high prices for things we produce in abundance when other countries do not?
Incidentally the evil and repressive Chinese regime does not have any problem providing healthy school lunches.
RESTORE STATE SOCIALISM IN AOTEAROA! DEATH TO CAPITALISM!
Perhaps we should impose an inverted tariff on butter exports. The proceeds could be used to reduce the local price.
It’s probably not going to be too long before the growth of China’s dairy industry (with the help of NZ herd genetics) drives down price. Then what will we export?
Preferably National, ACT and NZ First joseph, they are a very low commodity however.
Mmmmm choose between a staple diet food that’s been put on household tables for years that households prop up in everyday rates and subsidies when things ain’t going to right for farmers because of the world economy or a meal that is the same price as a 400gm block of reconstituted milk power being touted as the saviour of the NZ poverty
Wonder if importing butter from overseas would be cheaper for the country, look for best international price. We should treat Fonterra like a foreign company if they are going to act like one, impose tariffs and fine them hard for their pollution and monopoly price gouging as a responsible country would do. Why not get your mate Seymour on to it Bomber, or is he too busy spending his bonus?
https://www.stuff.co.nz/politics/360706887/government-cuts-kiwisaver-contribution-mps-get-generous-superannuation-subsidy
funny how bene government can afford expensive junk but not everyone else with a lesser retirement fund.
https://www.youtube.com/watch?v=tvpjVTGkTbA
“What’s coming is Worse than a Recession…” – Richard Wolff’s Last WaRnInG
A very good video by Richard Wolff showing our economic realities today with a hint of why our butter is so dear, but you can work that out for yourself after listening to him. Why is Trump? What is inflation, internationalism? Just following the why as Mr Wolff does and finding the answer is what we have to do and TDB readers and commenters are able and up too it.; but others yet to concentrate? Wolff speaks well, convincingly, produces simple statistics and if you want more to back them up I am sure they are available.
What we need to do is give ordinary people an opportunity to present challenging questions that can be answered by notable informed people in an understandable way in a Peoples Post or something where they can remain for others to see. Not rely on the net to catch our attention. Words that have life beyond the moment are needed. Can people send in questions as emails with their preferred code name, their pseudonym so they don’t get jumped on by the determinedly ignorant amongst their companions or family or those who just know already?
Fonterra the effective monopoly is Labours creation, never forget.
The “Free” trade agreement with China that enslaved our country was signed by Clarks Labour government.
The left is the problem not the answer.
At one time we used to be self sufficient in wheat, but now about 90% of our wheat is imported from Australia. Why can we not re-establish our wheat industry and, if necessary, impose a tariff on Australian wheat. Or would be in contravention of the CER agreement negotiated by a National party government.
Make your own butter from cream like the Amish: https://youtu.be/vjI-XUDyOLQ?si=HyAHljdjWxSYwZ_f
(I’d wear gloves though). Check out that accent!
Once apon a time we were making big money from wool now we are dumping it down the nearest gully because we are too fucken lazy to turn it into something use full because we are now focused on selling bulk and adding no value .We used to make carpet and clothing from wool but now we use plastic instead .Now those same wool farmers are selling to the highest bidder and then moaning because that person turns the unprofitable sheep farm into a profitable forest .The problem is though the tree farmer also just sells bulk logs without adding any value to that wood .Very soon we may find we are dumping butter down the gully along side the wool pile .
We cant sell water much longer because it is too polluted so I guess we can sell heart disease disguised as food .
Well well well Guys you are all obviously upset about the price of butter, the environment, Politicians, wood and wool.
I’ve often thought that research and development of our agri sector is woefully underfunded, by the Government and the private sector. Currently Government funding of R&D is somewhere around 1% of our Gdp.
Other developing nations sit around 4% for R&D
For a nation relying on exports this is pathetic! Selling unprocessed logs off shore is just plan dumb!, Wool although scoured so it has some value added prior to export is also undervalued. Further manufacturing to both of these products would add immense value to the economy. Increased R&D would enable this.
As for Fonterra and the price of butter to the local market this is just pure greed. Our local market is less than 5% of the total production from fonterra
More regulation in this area is required.The price of butter is an inflationary trigger.
Barbara Edmonds had some very interesting ideas about establishing regional protections for food and security in the podcast would like to hear more about this. Obviously Trump has upended the established order so it’s time to think of new ways to arrange things so as not to be vulnerable as Canada and Europe are scrambling to do. Obviously the domestic market ought to be protected Fran mentioned about dual pricing for tourists and locals in China… Looking at how countries that depend on rice as a staple protect their local food supply and production could offer clues how NZ can do it. Butter is not bad for you in moderation but the chemical concoction of margarine certainly is.
Strangely Gee (butter without the almost free water) used to be more expensive than butter but since the last price rise is now cheaper, Hard to fathom why one form of milk fat goes up in price while the same milk fat in another form stays the same.
im a nz dairy farmer. why should i sell butter to nz supermarket for $5 if i can sell all i can make (through our co-op, fonterra) overseas for $10. im in business to make money not to be a foodbank for nz consumers.
if i sell butter in NZ for $5 but can sell it overseas for $10. im losing $5 per pack of butter. thats just stupid.
i will sell butter in NZ, but only for the same price i can get for what I (fonterra) can sell it overseas for.
every other nz business that also exports has the same pricing stratergy.
Because you have a social licence you owe us all – WE ALLOWED YOU TO FORM A MONOPOLY – that’s why!!!!
Why must we explain your capitalism to you?
That’s why we need regulation. To mitigate against the entitlement of big dairy. What next? You’ll have your hand out for drought relief or flood relief the next times the sun shines for too long or it pours down. Expect us to pay for that, do you?
“im in business to make money not to be a foodbank for nz consumers”.
And that sums up nicely what’s wrong with this country…..
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