Market working for food prices


Spring has sprung, the grass has riz, I wonder how the prices is?

They’re down, at least those of fresh vegetables are, and that has contributed to a drop in the Food Price Index  for the second month in succession.

Anyone with even a passing knowledge of the relationship between seasons, vegetable growing and basic economics won’t be surprised.

The warmer weather promotes growth, spring vegetables come on to the market and the increase in supply leads to a fall in prices.

Federated Farmers president Bruce Wills says th FPI drop is proof that the marekt is working to deliver fair prices.

“If you look at the food staples, like vegetables, bread and some meat, there’s actually been a fall and that needs to be acknowledged.

“While vegetables usually fall at this time of the year, I need to point out some big falls in beef and lamb because they’ve been subject to some comment.

“Milk of course remains steady due to Fonterra’s retail freeze. Despite this, one of our Wellington staff said his local dairy, the Standen Foodmarket in Karori, is selling four litres for $6.90; $1.73 a litre.

“All of these things have helped contribute to a one percent fall for September. This latest fall follows on from a 1.3 percent fall in August.

“Looking at the year to September, food prices are up 4.7 percent and are pretty much inline with inflation. We mustn’t forget that half of the increase is due to last October’s GST increase. . . “

Food prices have been relatively cheap in New Zealand. That is no longer the case and given the growing demand for food that is unlikely to change in the short to medium term.

However, prices are still usually a fair reflection of the costs of production and growing your own or buying food in-season is the best way to make the budget stretch further.




Stats NZ’s basket follows food fashion


Additions and subtractions from the basket of goods Statistics NZ uses to compile its food price index reflect changing fashions in eating habits.

1993:  grapes, frozen mixed vegetables, mussels, over the counter milk, infant formula and ethnic meals were added;  Brussels sprouts, frozen beans, canned meat (corned beef) canned sardines, rolled oats and white pepper were removed.

1999: avocado, alfalfa sprouts, capsicum, taro, fresh pasta and energy drinks replaced delivered milk, milk powder, quiche and baked potatoes.

2002: instant noodles and olive oil appeared and soya bean cooking oil went.

2006: spring onions, canned soup, soy sauce, dried herbs, ground coffee,  bottled water and complete frozen meals were added;  Worcestershire sauce, pepper corns, soup powder and takeaway soup were removed.

2008: fresh pineapple, cooked chicken, soy milk, free range eggs, hummus dip and chilled fruit juice were added in place of fresh peaches, saveloys and condensed milk.

2011: dried apricots, frozen berries, frozen chicken nuggets and flatbread were added and nothing was taken out.

The next review will be carried out in 2014.

Information for the FPI review came from a survey of about 3,100 households, from food manufacturers and distributors and supermarket scan data from the Nielsen Company.

Meat up veg down


There was a very small decrease in food prices  in October, the first time there hadn’t been a monthly increase in more than a year.


Food prices overall decreased by 0.3% last month.

Fruit and vegetables decreased by 6% helped by a 50.7% drop in the price of lettuce and a 24.9% fall in the price of tomatoes. However, these were offset by a 20.6% increase in the price of potatoes.

Vegetarians were better off than meat eaters because, the price of meat poultry and fish increased by 2.4%. Beef prices rose 5.4% and prepared meat and smallgoods icnreased by 6%.

The lower price of international dairy products filtered through tot he supermarket with a 4% decrease int he price of cheese. However, bread was 3.2% more expensive and grocery food as a whole increased by .6%.

Food prices increased 9.9% in the year to October.

Grocery prices increased 11.9% , meat, poultry and fish prices rose 11.0%, fruit and vegetable went up 12.5%, restaurant meals and ready-to-eat food increased 6.4%, and non-alcoholic beverages rose by 4.7%.

Within these subgroups the price of chedder cheese went up 39.2% and potatoes increased in price by 41.7%.

These figures explain why gardening shops report increased sales of vegetable seeds and plants, although from my experience of vegetable gardening – which is admitedly haphazard – growing your own isn’t necessarily cheaper.

Home grown vegetables definitely taste better and it’s lovely to be able to pop outside and pick a good part of a meal.

But by the time I take account the cost of seeds and plants, tools bought then replaced because they go out on the farm never to be seen again, hoses and sprinklers which do the same thing, the fence to keep the rabbits out and the failures I’m not sure that I’m saving any money.

Not all cheeses are equal


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).

Biggest food price rise in 19 years


I just popped in to the supermarket for a couple of things which, as invariably happens, turned into a basket full and a checkout total more than twice the amount I was expecting.

The latest food price index from Statistics New Zealand helps to explain why: food prices inceased 2.7% in August which is the biggest rise since July 1989 when GST increased from 10% to 12.5%.

All five subgroups recorded upward contributions to the latest Food Price Index (FPI) increase, with the most significant upward contribution coming from the fruit and vegetables subgroup (up 9.6 percent). Within this subgroup, the main contribution came from vegetable prices (up 14.5 percent), driven by higher prices for lettuce (up 33.6 percent) and tomatoes (up 42.8 percent). If vegetable prices had remained constant at July 2008 prices, the FPI would have risen 1.3 percent.

Vegetable prices have increased by a total of 36.4 percent over the past four months, with growing conditions hampered by unusually wet weather.

Grocery food went up 1.9% and meat, poultry and fish increased by 2.6%.

The most significant upward contributions to these subgroups came from, in order of significance, higher prices for cakes and biscuits (up 8.0 percent), fresh milk (up 4.4 percent), and lamb (up 16.8 percent). The most significant downward contribution came from lower prices for yoghurt (down 8.9 percent).

The annual increase in food prices of 10.6%  in the 12 months to August was the largest since the year to May 1990. 

All five subgroups recorded upward contributions to the annual increase, with the most significant being the grocery food subgroup (up 13.1 percent). Within this subgroup, the main contributions came from higher prices for cheese (up 43.8 percent), bread (up 17.4 percent), fresh milk (up 12.5 percent), and butter (up 87.6 percent). 

The fruit and vegetables subgroup rose 19.1 percent in the year to August 2008. The most significant upward contribution came from higher prices for lettuce (up 145.3 percent).

These increases are well above most increases in pay rates and come with high interest rates and the increase in the price of other necessities such as fuel and power.

All of those will be straining household incomes which will be contributing to the slowing domestic economy. That was one of the factors which prompted the Reserve Bank to drop interest rates this morning but it will take a while before the impact of that filters though to household budgets.

No place for savs in food basket


The butcher used to call in his van once a week when I was a child. During school holidays we’d hang round waiting for his delivery and be rewarded with a cheerio or saveloy to eat.

Butchers don’t deliver anymore, no doubt handing out saveloys would contravene a health standard and saveloys have declined so much in popularity that they’ve been taken out of Statistics New Zealand’s Food Price Index.

Chris Pike from Stats NZ said what goes in to the average basket of food on which the figures are calculated is based on data collected every three years from a survey of 2,600 households. This information is supplemented by supermarket scan data and reports from food manufacturers and distributers.

Fresh peaches, condensed milk and cheesecake were also removed from the average basket although cheesecake will be included in the new category of frozen deserts. In a sign of changing tastes and diets fresh pineapple, soy milk, free-range eggs, hummus dip and chilled fruit juice were also added to the basket.

The new relative importance of the FPI subgroups indicate that about $21 of every $100 spent by households on food is spent on eating out or takeaways. About $17 of every $100 spent on food is on meat, poultry and fish, and about $14 is on fruit and vegetables. Non-alcoholic beverages such as coffee, soft drinks and fruit juice account for $10, and the remaining $38 is spent on grocery food.

The price of the basket of food went up 7.8% in the year to July. This was partly due to the impact of the international price for milk whcih showed in a 59.3% increase in the price of chedder cheese, an 89.4% rise in the price of butter and a 10.2% increase in the price of fresh milk.

The improved international market for grain also had an impact on domestic prices with bread costing 19.6% more. The other major contributer to the overall price rise was grocery food which went up by 11.2%.

July figures showed a small overall increase in food prices – 0.6% for the month – and that was mainly due to higher prices for fruit and vegetables which went up 3.6%

The breakdown could provide a good argument for eating seasonal produce because the biggest contributers to the rise were lettuce and cucumber which went up 32.4% and 27.9% respectively. However, the price of tomatoes dropped 32.4% and nectarines were 32.3% cheaper.

Grocery food went up .5% in July, restaurant meals and ready-to-eat food increased by .6%  and non-alcoholic beverages rose .4%.

The improved prices dairy farmers are receiving had a spin-off on the price of yoghurt which rose 9.2%. Meat, poultry and fish prices decreased 1.0 percent. The main contributor to this decrease came from lower prices for fresh chicken (down 7.1 percent).

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