Fonterra agreed to freeze the price of milk for the rest of the year but other dairy products are getting more expensive:
The price of cheese and yoghurt could be on the way up at a supermarket near you.
Cafe owners supplied by dairy processor Goodman Fielder have received word the price they pay for some dairy products will go up from next Monday.
Some say that’s a result of Fonterra’s freeze on milk prices, and the same could happen in supermarkets.
Fonterra CEO Andrew Ferrier was interviewed about this on Campbell Live last night. He said the company’s profit margin on milk was around 12%:
“All we do is run a milk price which converts the world market price to the New Zealand equivalent,” . . .
Mr Ferrier says it is the distributors who set the price consumers pay in the supermarket.
“Ultimately it’s the distributors who are buying product – whether you are in a dairy or a supermarket – who will set pricing polices as they see fit.
“They buy from us and they have there own pricing policies.”
He reiterates that Fonterra is not pointing the finger at supermarkets, saying price structures are often very complex.
“I’ve been in business a long time, the last thing you do is try to put important customers in a difficult situation – and I won’t.”
I have no doubt that price structures are complex but how often do you see milk, cheese or yoghurt on special?
What about other basic foods – meat, eggs, bread, fruit and vegetables?
Is it my imagination or are non-staple foods and grocery items on special much more often than the staples, most of which are produced domestically if not locally?
Regardless of the answer to that question, higher prices for goods we export are good for the country. Producers are already benefitting from better returns and that will filter through the economy. Unfortunately the higher prices are filtering through first which makes it difficult for people on limited budgets.
But the problem of affordability is not high prices it’s low wages and better prices for exports is one of the best ways to improve them.