Look at retailers not producers

August 3, 2011

Federated Farmers and Fonterra are both pleased that the Commerce Commission has decided it has no basis for a price control inquiry into milk.

However, it’s not ruling out a further inquiry  into how Fonterra sets the price it pays farmers and what it charges other processors.

Sue Chetwin from Consumer is calling for a milk commissioner and  Labour and Green MPs want the Commerce select committee to launch another inquiry.

If they’re doing that, should look at the whole supply chain.

The Commerce Commission report said there was enough retail competition between  two major supermarket chains, dairies, service stations and other retailers.

I’m not so sure about that. Almost everything is more expensive at dairies, service stations and other small retailers. Those are the places you go for emergency supplies, not normal grocery shopping.

That leaves the supermarket duopoly.

It is difficult comparing prices here with those overseas because of the exchange rate and different taxes, but our observation at restaurants and supermarket during our recent trip to the USA and Canada was that food there seemed to be cheaper than it is here.

Some prices in a Walmart in Canada were: beef mince $9.50/kg; T bone $16.22; sirloin $11.10; stir fry $15.06; roast beef $12.06; bacon $10.44; pork tenderloin $10.96; pork chops $8.80.

I don’t have local comparison for these, but a  New Zealand boneless leg  lamb was selling for $14.92/kg  at Walmart, I saw it priced at $29.99/kg at a New World  here yesterday.

A frozen leg of New Zealand lamb was $13.62/kg.

It looked good but beside it were Walmart’s own brand of frozen loin chops selling for $20/kg. The bag was full of ice and had they been a tenth the price we might have contemplated buying them for dog meat.

Eggs were $2.98/dozen; skim milk cost $1.38/litre, full cream milk was $2.77/litre..

Cheddar cheese cost $13.43/kg which, taking the exchange rate into account, wouldn’t be much different form here.

The only thing that was far more expensive – and to our admittedly biased taste buds, not nearly as nice – was ice cream. A small cone cost $5.

Prices recorded at one supermarket and the gut reaction from purchases at other supermarkets and restaurants aren’t much to build a case on.

But our overwhelming impression was that food was cheaper and we wondered how much that had to do with greater competition between supermarkets there in contrast to the duopoly which operates here.

If there’s to be an investigation into food prices it needs to be a thorough one which includes retailers not just producers and processors.


Unit pricing – yes please

November 13, 2008

If 700 grams of whatever costs x and 1.3kg costs y which is cheaper?

I stand in the supermarket faced with this equation and go back to school maths classes with trains travelling in opposite directions and different speeds and I know there’s going to be a crash because my mind just goes blank.

Because of that I’m with Consumer magazine which has made a call for retailers to display unit prices.

Buying two packs of 100 teabags could be cheaper than one 200 pack, but it was harder to figure the best deal when comparing such things as 700gm and 1kg blocks of cheese, it said.

Consumer said manufacturers and supermarkets did not make it easy to compare prices and sometimes smaller packs worked out cheaper than large packs or bulk items.

Even if it didn’t save me money, I’d welcome the move as it would free me from from the stress of revisiting those long ago maths lessons.


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