Yesterday’s announcement on the Food Price Index showed the price of chedder had gone up 61.6% in the year to September but the increase in the price of milk was, by comparison, a modest 12.6%.
I was puzzled by that difference and have found there’s more to the story – the price of chedder has gone up much more than that for gourmet cheeses:
The 1kg block of mild cheddar cheese tracked for the FPI rose by 59.3 percent in the year to July 2008, while the 125g round of camembert had a flatter rise of 10.6 percent. Increases for cottage cheese (21.5 percent) and processed cheese slices (24.7 percent) were between those recorded for cheddar and camembert.
Andrew Smith, general manager of marketing at Fonterra Brands, said that the main production input costs vary for different types of cheese. He said the prices of block cheese – such as cheddars and processed cheese – are linked to international commodity prices. The significant price increase for mild cheddar over the past year is a result of the unprecedented rise in global dairy commodities. In contrast, gourmet or specialty cheeses, such as camembert, are linked to the price of domestic ‘white milk’, which has also increased but at a more modest rate than has occurred on the commodities market.
Fresh milk prices in the FPI increased by 10.2 percent in the year to July 2008, broadly in line with the 10.6 percent increase for camembert.
I’m still puzzled because I thought all milk was white; and the price farmers get for their milk is related to international commodity prices whether or not it’s sold for export or town supply.
There is a small subsidy for the local market but that still doesn’t explain the big difference in the price of milk and cheese.
(The difference in figures quoted is because the first ones for the FPI are for the year to September and the second ones for the cheese story are for the year to July).