Is this just poor journalism or economic ignorance?
High milk prices for consumers look set to continue into the foreseeable future, with a report to the Government showing grim price predictions beyond May.
In a report to Agriculture Minister David Carter, the ministry said high domestic costs were being driven by overseas dairy prices.
“International prices are currently at high levels and are likely to remain for the remainder of the year to May 2011 and into the next. This will keep retail milk prices up,” the report said.
Grim price predictions? What’s grim about increased prices for one of our most important exports?
Fortunately Minister of Agriculture David Carter has a better grasp on the facts:
“We are dependent, as an export nation, on what we receive for our products internationally, and while that does have a negative, immediate impact on New Zealand consumers, frankly, the better the primary sector performs the better all New Zealanders will be,” he said.
Dairy giant Fonterra choosing to freeze the price for the rest of the year had taken the heat out of the issue, he said.
Mr Carter said it would be a bad decision for the Government to intervene to lower domestic prices.
“We could, if we were silly enough, impose some sort of subsidy on domestic milk, but it would be an impractical, silly move in my opinion,” he said.
“We’re a nation that argues passionately for the chance to freely trade to other markets in the world, we would ruin a well-established reputation around an advocate for free trade if we were now attempting to put subsidies in place domestically.”
Quite.
We can not preach free trade overseas if we went back to the bad old days of subsidies at home.
Rising prices are hard for people whose budgets are stretched but the answer to that isn’t to hobble one of our best performing export industries.
More money for exports is the key to economic growth which will help to provide more and better paying jobs.
