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The Farmers’ Share

15 May 2008

The Farmers’Share

A report commissioned by Federated Farmers shows that while food prices in New Zealand may be rising, the producers of some food items are not the main beneficiaries of this.

The report, prepared by the New Zealand Institute of Economic Research (NZIER) covers a number of key items, including bread, milk, butter, cheese, honey, lamb and beef.

In respect of these items, food producers received an average of about a quarter of the price that these items sold for in retail outlets. The individual farmers share was: for bread -16.37 percent; lamb chops - 30.97 percent; blade steak - 18.86 percent; milk - 35.46 percent; honey - 40.12 percent; and cheese - 5.30 percent.

The president of Federated Farmers, Charlie Pedersen says the report shows that in the case of bread, a food producer gets the equivalent of three slices of a 20 slice loaf, a dry-stock farmer one of four pieces of steak and in the case of a dairy farmer, a tiny slice of cheese.

“The cause of high food prices is complex and outside the control of the food producer. Transport, processing, energy and marketing, plus normal margins are some of the factors which have pushed prices up. There is a link to export prices, but this has never changed since New Zealand began exporting meat back in 1882. There is a misconception that because dairy farmers are receiving good payouts from Fonterra, this is driving up prices, Mr Pedersen said.

“In fact, fertiliser and the cost of compliance have risen. Food producers have had to cope with a severe drought and pay high prices for supplementary feed for their stock. Many sheep and beef farmers will suffer losses this year adding to the losses of previous years.

“This report clearly shows that food producers are certainly not ‘creaming it’. Let’s not forget that food producers also have to buy food for their families,” said Mr Pedersen.

Charlie Pedersen says the report provides some quality information about a complex and emotional issue that is attracting widespread attention in the media.

See full report here.


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