Milk price freeze blamed for rising cheese, butter costs

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Tue, 12 Apr 2011 12:22p.m.

A milk price freeze is being blamed for increasing prices of other dairy products

A milk price freeze is being blamed for increasing prices of other dairy products

By Janika ter Ellen

The price of cheese and yoghurt could be on the way up at a supermarket near you.

Cafe owners supplied by dairy processor Goodman Fielder have received word the price they pay for some dairy products will go up from next Monday.

Some say that's a result of Fonterra's freeze on milk prices, and the same could happen in supermarkets.

Mike Marsland, who owns Wellington cafe Ernesto, has just been sent a letter saying from Monday next week, the price he pays supplier Goodman Fielder for yoghurt will go up by up to 6 percent, and cheese and butter by up to 9 percent.

"All our base prices on milk are staying the same, status quo there, but every other product that we use will be going up," he says.

Mr Marsden has no doubt the rise comes as a result of the price freeze Fonterra's pledged to sustain until the end of the year on milk. Goodman Fielder buys its milk from Fonterra, and is keeping up with its freeze prices for now.

But last quarter the price it pays Fonterra for milk solids increased by 60c/kg, and that mean the prices of other dairy products are going up.

"I see it as a bit of an insult, because I'm not silly, and in this industry our margins are very, very fine," says Mr Marsden.

Smaller supplier Klondyke Fresh also buys milk from Fonterra. It doesn't make yoghurt or cheese, but says it's only now a matter of weeks before it can no longer compete with Fonterra's freeze on milk.

Supermarket giant Progressive is pledging to keep the price of milk stable until the end of the year, but it says that's the only guarantee it's given.

"We're disappointed to see the price increases on dairy products," the company said in a statement. "When Fonterra increases their prices to suppliers such as Goodman Fielder, this eventually flows on to retailers like ourselves and therefore these price increases will ultimately be passed on to the New Zealand consumer."

So, be prepared to pay more for some dairy products in the near future - or just stick to milk.

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Comments

18 Apr 2011 07:14p.m.

Mike wrote:

Some claim cheese is too expensive to buy.
Some claim milk is too expensive to buy.

What are these people spending their money on? Its obviously not on necessities. Its not they can't afford, its they can't manage their own finances.

Yes milk and cheese are more expensive than they have been but not bad badly priced even today. Adjust for CPI and its been higher in the past 30 years than now.

If you can afford any of:
- alcohol
- cigarettes
- electric/hybrid car
- pot
- P
- Sky TV
- eating out or takeaways
- recreational activities like going to movies
- snack foods (biscuits/chips)
- pre-made meals (heat/eat)
- use taxi's

Then you have plenty of money to buy milk/cheese if you cut down some of your luxeries.

Take Cheese, I can still buy for $11/kg at pak-n-sav. Its a fair price. At $11/kg its more expensive than say mince as a protein source, buy its a lot cheaper than many steaks. As a food price/kg its still cheaper than many other foods.

When the carbon tax comes in it will have to be collected almost entirely from the NZ consumption. Lets face it, if farmers have to pay it, they will have to pass those cost on. They dont set international prices so basically they will have to pass it on to prices they do set, ie local prices. This means when the carbon tax comes in that so many NZ anti-farming idiots are wanting, it will almost all have to be paid for by the NZ consumer so expect over 30% price rises with a carbon tax. There isn't the money in Dairying for the farmers to suck up the carbon tax, so it will be passed on to the NZ consumer.

While Fonterra is slowly moving from primary production to more secondary/tertiary production, they are also raising the price they pay farmers. This means the product mix they sell internationally will be worth more/tonne so even if International prices remain static, the product mix will change and prices will slowly rise with the same margins.

14 Apr 2011 09:05p.m.

kewl guy wrote:

the price of milk = ridiculous!!!!!!!!!!!! its 2 dear 4 some people keep it low

13 Apr 2011 05:09p.m.

Matthew wrote:

New Zealand seems to be suffering the worst inflation ever.
For some reason, the Government, which has a conflict of interest in the taxation of petrol, is happy to see the rises in prices and costs to the average New Zealander.

New Zealand, which promotes being a leader in raw produce is heading to an economy similar to that of developing nations, in which the average citizen cannot afford to buy the necessities that are required to sustain life.

The people that have been voted into power, which receive hundreds of thousands of dollars annually to protect the rights of New Zealanders, that they have lost sight of the reality which will eventually lead to food stamps, the inability to afford to commute to work, resulting in escalating unemployment, bankruptcies, and the decreasing will to 'get ahead'
I have personally seen too many people saying 'F**K IT - if they wanna push me bankrupt i will save them the trouble and do it myself'
this 'give up attitude' is spreading like a plage, forced by a spreading 'heavy handed' attitude which seems to be turning New Zealand into a country of beggers and theives.

When will the Government realise that business didnt vote them in, we as a nation of people did.
Compare the current economic climate to the great depression, all that is missing is the bankers jumping out of the windows of buildings.
it seems that we are one run on funds away from a total collapse in the financial system in New Zealand.

12 Apr 2011 08:06p.m.

mx wrote:

I work at a supermarket and believe me if there was a viable cheaper imported option someone would have offered it to us, there isn't, we must pay the world market price at thats the reality

12 Apr 2011 07:43p.m.

rj wrote:

As a fonterra dairy farmer I think we should unite and stop supplying the whinging NZ market with our product. Let them import milk powder from China - if they want cheap let them have it.

12 Apr 2011 07:19p.m.

Doug wrote:

Statistics NZ examined the retail price of milk from the 1890s, when a quart cost just over threepence, to this February when the average price hit $3.68 for two litres (based on the cheapest available brand). The February result was the highest in nominal terms, although in real terms the cost of two litres of standard milk was higher in 1994 and 2002, after allowing for inflation

12 Apr 2011 07:11p.m.

Gump wrote:

Cant wait for the commerce commision report to come and clear Fonterra and prove all you dreamers wrong. This country needs four companies the size of Fonterra to catch up to oz and instead applauding the fact they doing well and frankly saving this country ass they get beaten with a stick and critcised. Wake up NZ it isnt milk too expensive, its your wages are too low. If want them to go up then we need more companies like Fonterra. If we head down this road of subsidising the domestic market then it has to apply to every type of export and also means when prices are low then the domestic consumer will have to prop up exporters to compensate them for not relising the full monertary potential of their product during the good times.

12 Apr 2011 07:02p.m.

Peter wrote:

My wife and I are solving the problem by moving away from dairy fats altogether. Instead of butter we'll be using lard instead, it may not be as healthy as butter but since we only use it in cooking (rarely) and baking it's more economical at $2 cheaper than butter and as an animal fat greedy Fonterra has no control over its pricing.

12 Apr 2011 06:14p.m.

Mike B wrote:

We should petition the government to stop subsidising Fonterra’s share of the ETS tax.
Why should tax payers subsidise a company that has no scruples about ripping them off?

12 Apr 2011 06:14p.m.

Eden wrote:

Maybe it might be easier just owning a cow and getting all the dairy ingredients from them. Fonterra is just a big tax collector wanting everyone's money. F*$# Fonterra