Why pick on farmers?

December 28, 2011

The Herald editorial praises Fonterra for its milk-in-schools scheme but is still thinks the price of milk is too high.

What appears to be the nub of the problem – how Fonterra sets the price it pays farmers for their milk – is also being examined by an interdepartmental group. Its report is due by the end of this month. But if its work on the mechanics and methodology of the confidential formula used by the company since 2009 informs that of the parliamentary committee, it should not supplant it. The public would be best served by its representatives determining whether the price paid to farmers is set higher than it should be to stifle competition, and if this should be fixed by having it set by an independent commissioner.

Why pick on farmers? The price paid to the producers is only one factor in retail cost of milk.

Between the farm gate and consumer are the costs of picking up, processing, distributing and retailing all of which add margins.

As for price fixing by anyone, independent or not, that would be a very draconian step which could well have perverse results.

When the Argentinean government tried to bring down the price of meat for domestic consumers by imposing high taxes on the exports farmers simply converted to more profitable produce.

Domestic milk production is a tiny proportion of Fonterra’s market. If the farmers who supply it don’t get the same as those who supply for the export market they will stop supplying it.

That aside, the nub of the problem isn’t the price of milk nor how it’s set. The nub of the problem is not the high cost of milk or nay other food, it’s low incomes and that won’t be addressed by price fixing.


Fonterra putting milk back in schools

December 16, 2011

School milk was not one of the happy memories of my childhood.

A half pint was too much for me to drink at a time and it was usually warm. Besides, like most of my contemporaries we had plenty of milk at home.

Ample milk and adequate diets are no longer the norm for too many children and Fonterra CEO Theo Spierings has announced a plan to put it back in schools.

Mr Spierings says New Zealand has the potential to be the dairy nutrition capital of the world, and this should start at home with Kiwis drinking milk.

“When I took over this role I made a promise to take a fresh look at how we could make milk more accessible in New Zealand,” says Mr Spierings.

Milk is an important building block for good nutrition. We want Kiwi kids to grow up drinking milk because it is good for them.

We are looking to introduce a Fonterra Milk for Schools programme. We want all New Zealand primary school children to have access to dairy nutrition every school day. For some New Zealanders this initiative will bring back memories of the  Government programme which operated in New Zealand primary schools between 1937 and 1967. We’ll ensure this time that the milk is cold and tastes great.

The company is staring with a regional pilot for primary schools in Northland, covering 110 schools and 14,000 children, starting during the first term next year.

 It will be a voluntary programme for schools to opt into so we can get a fix on likely demand from schools for such a programme.   “We don’t want kids having to drink warm milk in summer like the old days, so we will look at installing refrigerators in schools, and also explore options for recycling the milk packaging,” Mr Spierings says.

Results from the Northland pilot will be monitored during the first three terms of the 2012 school year with the intention of progressing with a nationwide programme for the start of the new school year in 2013. Mr Spierings said Fonterra would welcome support from other partners for a nationwide programme, including the Government.

As a supplier and  shareholder in Fonterra I can see social, health, marketing and PR benefits from this scheme but it comes at a cost.

The company announced an increase in the forecast payout this week and even without that expected returns this year were reasonable. But what happens when the price of milk, and therefore returns to farmers, go down? Once the provision of  “free” milk is established it will be difficult to take it away again.

I’m definitely not keen on the government getting involved in the provision of school milk, especially if it’s not being aimed at only those in genuine need. Its money would be better spent on initiatives which address the causes of ill-nourished children.

The company has been criticised for the high price of milk on the domestic market and is continuing to review it.

Our motivation is to have more New Zealanders drinking more milk because it is important for basic nutrition. To achieve this, we have to make it available and affordable.

In recent years we have seen a major lift in international dairy prices which effectively doubled in 18 months. This has pushed up the cost of milk prices locally and we have seen consumption decline, with New Zealanders drinking less milk.

Traditionally milk consumption in New Zealand has been increasing around 1-2 per cent per year but it is currently declining by a similar rate.

“We are exploring a range of options to turn around the consumption decline by making milk more consistently affordable and will report back in the first quarter of next year,” Mr Spierings says.

Fonterra will also trial milk sales in its RD1 rural supply stores.

Anchor is our flagship brand and it makes sense to have it available in the 64 RD1 rural stores around New Zealand which we now own 100 per cent. “Initially we will be focusing on smaller towns that don’t have supermarkets nearby. From here we can measure the demand and decide whether to roll this out further,” Mr Spierings says.

Customers of RD1 stores are predominantly farmers. But if the stores sell milk well below supermarket prices they will broaden their customer base and the competition will probably force supermarkets to reduce their mark-ups.


The end of free milk in schools

February 10, 2010

On this day in 1967 the provision of free milk in schools ended.

It had been introduced in 1937 as part of the Labour government’s plan to boost the health of children.

By the time it finished it was costing the government about 840,000 pounds a year.

At Oamaru South School the milk was delivered to the gate where it sat in all weathers until the milk monitors – some of the bigger standard four boys – brought it in and delivered it to each classroom.

In winter it was freezing, in summer it was warm.

This was long before the days of homogenised or skim milk and each half pint bottle was topped with a large glob of cream.

In all seasons it was awful and the end of the daily torture by milk was celebrated by my generation of school children.


February 10 in history

February 10, 2010

On February 10:

1306  Robert the Bruce murdered John Comyn, his leading political rival sparking revolution in the Scottish Wars of Independence

1355 The St. Scholastica’s Day riot broke out in Oxford leaving 63 scholars and perhaps 30 locals dead in two days.

1567 An explosion destroyed the Kirk o’ Field house in Edinburgh. The second husband of Mary Queen of Scots, Lord Darnley was found strangled, in what many believe to be an assassination.

 1567 drawing of Kirk o’ Field after the murder of Henry Stuart, Lord Darnley drawn for Cecil (William Cecil, 1st Baron Burghley) shortly after the murder.

1763 The 1763 Treaty of Paris ended theFrench and Indian War and France ceded Quebec to Great Britain.

French and Indian War map.png

1775 Charles Lamb, English essayist, was born.

1798 Louis Alexandre Berthier invaded Rome.

1814 Battle of Champaubert

1840 Queen Victoria  married Prince Albert of Saxe-Coburg-Gotha.

 Marriage of Victoria and Albert by Sir George Hayter

1846 First Anglo-Sikh War: Battle of Sobraon – British defeated Sikhs in final battle of the war.

 Raja Lal Singh, who led Sikh forces against the British during the First Anglo-Sikh War, 1846

1870 The YWCA was founded.

1893 Jimmy Durante, American actor/comedian (, was born.

1894  Harold Macmillan, British Prime Minister, was born.

1906 HMS Dreadnought (1906) was launched.

HMS Dreadnought 1906 H61017.jpg

1920 Jozef Haller de Hallenburg performed a symbolic wedding of Poland to the sea, celebrating restitution of Polish access to open sea.

 

1923 Texas Tech University was founded as Texas Technological College in Lubbock.

1930  Robert Wagner, American actor, was born.

 

1931 New Delhi became the capital of India.

1933 The New York City-based Postal Telegraph Company introduces the first singing telegram.

1934 Fleur Adcock, New Zealand poet, was born.

1937 Roberta Flack, American singer, was born.

1947 Italy ceded most of Venezia Giulia to Yugoslavia.

1950 Mark Spitz, American swimmer, was born.

Mark Spitz Jul 2008-2.jpg

1952 Lee Hsien Loong, Prime Minister of Singapore. was born.

1955  – Greg Norman, Australian golfer, was born.

Gerg Norman visit USS John F Kennedy.jpg

1962 Captured American spy pilot Gary Powers was exchanged for captured Soviet spy Rudolf Abel.

  

  • 1964 – The aircraft carrier HMAS Melbourne (R21) collided with the destroyer HMAS Voyager (D04) off the south coast of New South Wales.
  •  Animation showing the courses and positions of the two ships leading up to the collision

    1967 The provision of free milk in schools ended.

    End of free school milk

     The 25th Amendment to the United States Constitution is ratified.

    1981A fire at the Las Vegas Hilton hotel-casino killed eight and injured 198.

    1982  Iafeta Paleaaesina, New Zealand rugby league player, was born.

    Feka Wigan.jpg

    1989 Ron Brown became the first African American to lead a major American political party when he was elected chairman of the Democratic National Committee.

    1996 The IBM supercomputer Deep Blue defeated Garry Kasparov for the first time.

      Garri kasparow 20070318.jpg

    2008 The 2008 Namdaemun fire severely damaged Namdaemun, the first National Treasure of South Korea.

     

    Sourced from NZ History Online & Wikipedia


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