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Possible milk price inquiry premature and confusing

9 August 2011

Possible milk price inquiry premature and confusing

Federated Farmers will represent dairy farmers at any milk pricing inquiry, but with a separate interdepartmental review of Raw Milk regulations underway by the Ministry of Agriculture and Forestry (MAF), Treasury and the Ministry of Economic Development (MED), the Federation feels a new inquiry is premature and confusing.

“Anywhere, anytime, any place, Federated Farmers will put the farmer’s case. Farmers have nothing to hide as there is a fair amount of analysis already in the public domain,” says Willy Leferink, Federated Farmers Dairy chairperson.

“On TVNZ’s Q+A, Paul Homes pointed out that retail milk prices have increased 23 percent over the past five years, but over the same period, inflation increased by 16 percent.

“It seems we’re going into another milk price inquiry because over five years, milk prices increased seven percent higher than inflation.

“On that basis, we should hold Select Committee inquiries into council rates, government spending, the emissions trading scheme and even replica sporting gear.

“As a taxpayer and a dairy industry participant, I still think it is premature to hold a Commerce Select Committee inquiry into retail milk prices when an interdepartmental review of the Raw Milk regulations is still to report.

“Even the Commerce Commission noted this in its recent analysis while MAF has reported separately on the milk price issue as well.

“Raw Milk regulations under the Dairy Industry Restructuring Act and the farmgate price paid to farmers are interlinked. It would have been far wiser for these findings to come before considering a Commerce Committee inquiry as we’re in cart before horse territory.

“In 2008, the NZIER report ‘Food Prices – A Farmer’s Share’ found that a dairy farmer got 35 percent of the retail price of a two litre bottle of milk and I currently get around $1.30 for two litres of milk. This means my ‘farmer’s share’ remains about 35 percent in a $3.68 two litre bottle of milk as recorded by Statistics NZ.

“The NZIER’s ‘Food Prices – A Farmer’s Share’, may provide a model for the Commerce Select Committee to incorporate into its terms of reference. All farmers, whether arable, dairy or sheep and beef, need to be environmentally and economically sustainable.

“Given events of the past few days, you have to seriously ask if the All Blacks jersey is fast becoming the new milk,” Mr Leferink concluded.

For a copy of the 2008 NZIER report, Food Prices – A Farmer’s Share, please click here.


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