Parliament must move fast on milk price inquiry

A Commerce Select Committee inquiry into milk pricing needs to begin as soon as possible as there is very little time left in this Parliament, the Green Party said today.

Green Party Food spokesperson Sue Kedgley said it was important that the committee’s investigations were not constrained by narrow terms of reference, as the Commerce Commission inquiry was.

“It is essential the terms of reference are wide-ranging, and allow the committee to examine whether an independent body—such as a Commissioner—should determine a fair price for domestic milk, not Fonterra.

“The nub of the problem is that we have a company which is a monopoly supplier of milk that is also setting the price of milk. In any other part of the economy that would be called a rort.

“It is essential, too, that the committee examines why the way the price of milk is set remains a state secret.

“Even after a lengthy Commerce Commission investigation, we still don’t know how the price of milk is set or whether Fonterra or supermarkets are putting high margins on milk.

“Setting a fair price for milk should be done in a transparent fashion, not hidden behind a veil of secrecy.”

Ms Kedgley said the committee also needs to examine why there is so little competition in the domestic milk market.

“New Zealand has an extremely concentrated domestic milk market, with Fonterra having a monopoly on the supply of raw milk.

“It is an unusual situation to have just two major players, Fonterra and Goodman Fielder, selling milk to a supermarket duopoly.

“We need to investigate whether this is contributing to high milk prices, and how to bring more competition into the domestic milk market.

“The regulations and legislation surrounding the domestic milk market need to be overhauled, and a select committee inquiry will be able to make recommendations about this,” Ms Kedgley said.

Ms Kedgley said there was something radically wrong when children living in a country that was overflowing with milk, could not afford to drink milk.

“Milk is a staple product, and the main food product we produce. Why is it unaffordable to many people living in New Zealand?”

ENDS

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