David
PARKER
Economic Development spokesperson

9 June 2011
MEDIA STATEMENT

National’s spin on milk prices turns sour

National’s spin --- that making farmers pay 10 per cent of their agricultural greenhouse gas emissions will drive up the price of dairy products --- has been shown today to be wrong by its own officials, says Labour’s Economic Development spokesperson David Parker.

David Parker said today’s Commerce select committee received a briefing from officials from the Ministries of Agriculture and Forestry and Economic Development on the price in New Zealand for dairy products.

The ministries confirmed:
“Domestic dairy prices reflect trends in international prices received by New Zealand exporters, but the margins between export and retail prices depend upon retail industry behavior. The correlation between Statistics NZ monthly retail price series and monthly export prices from March 2008 to December 2010 was 83% for butter and 88% for cheese. The correlation between retail butter and retail cheese is also strong at 86%.”

“In other words, while there are variations in costs and margins charged by the retailer in New Zealand, the underlying price paid to farmers reflects the international price,” David Parker said.

“This is, of course, what the government itself has said until just weeks ago when it repeatedly claimed it can’t do anything about the high prices Kiwis pay for milk and cheese, and then switched to claiming that asking farmers to pay for their agricultural emissions would increase prices in New Zealand.

“That’s why the timing of this report is embarrassing for the Government, because it highlights that Labour’s policy requiring farmers to pay for about 10% of their agricultural greenhouse gas emissions will not put up New Zealand dairy prices,” David Parker said.

“National’s recent assertions that this would put up the price of dairy products (supported by an organised chorus from their backers in the farm industry) are plainly wrong.

“Labour believes New Zealand needs to broaden our export base beyond farming. To do this we need a research and development tax credit. To fund this New Zealand needs the farming sector to pay its fair share. What we don’t need is scaremongering from National,” David Parker said.

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