The price of milk and Fonterra’s role in setting it is the subject of on-going debate and will now be investigated by a Select Committee.
The ValueAdd Company has done a lot of the work for them and has beaten them to the unbundling.
They’ve used the information they’ve found to provide an on-line calculator which shows the cost components of milk production.
The calculations, which are based on some guesstimates, show the retail price includes mark-ups of 12% by Fonterra, 15% by wholesalers and 30% by retailers.
In a media release the company explains its calculations and concludes:
We built up other information from the referenced sources and our calculations came to the somewhat surprising conclusion that for the year ended 30 June 2011, a forecast payment to suppliers for milk of $8.00 per kg of milk solids (not yet finalised) would be $2.73 or 51.7% greater than the figure required to produce a break-even net margin on exported commodity products.
I am not sure why that is surprising.
It has been a particularly good year for commodity prices and the payout to farmers will reflect that and help make up for a couple of seasons ago when most dairy farms posted losses.