What’s Behind Key’s Cheesy Grin?

Written By: - Date published: 2:06 pm, June 8th, 2008 - 38 comments
Categories: budget 2008, election 2008, john key, slippery - Tags:

Ever since Labour’s budget was released, John Key has been talking cheese. I’ve been wondering why all his talk of blocks of cheese has been making him smile with such a big big grin. Well, a check of MPs’ financial interests sheds some light.

Slippery John is making a bundle from Kiwis buying cheese.  He is the third largest shareholder in the Dairy Investment Fund Ltd  owning 1.46 million shares. And, DIFL owns large chunks of no less than three cheese companies: 

Open Country Ltd lists Colby, Cheddar, Gouda and Edam in its product line sold in New Zealand and abroad.

Kaimai Cheese Company a producer of ‘top shelf’ specialty cheeses.

The Grate Kiwi Cheese Company. They grate it you pay for it.

That’s right, his cheese promotions are yet another of John’s great marketing ploys.

DIFL and John Key are making a mint from huge increases in world food prices. They even boast about it with a link from their site to a recent Wall Street Journal article that refers to New Zealand as the ‘Saudi Arabia of Milk”.

While there are similarities, there is, of course, a major point of difference in the analogy. In Saudi Arabia a litre of petrol costs about 35 cents rather than the $2 we pay here in New Zealand. Here a block of cheese is sold at market rates and the cost of a block of cheese is up 65% in the past year.

Who profits from that? Yep, that’s right Slippery John and his mates.   

And, when John talks about poor hard done consumers and how Labour doesn’t understand their plight, the sound of tills ringing in his own ears is drowning out the truth.

John Key is making a bundle off the backs of the average Kiwi battlers trying to put cheese in the kiddies’ school lunches.

38 comments on “What’s Behind Key’s Cheesy Grin? ”

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  1. jafapete 1
    8 June 2008 at 2:26 pm

    This explains why it was Key who opened the Kaimai CVheese Company’s new factory a couple of months ago. Funny, but I don’t recall them mentioning this tie with the company at the time.

  2. John 2
    8 June 2008 at 2:27 pm

    Amazing. How can Key keep a straight face when he blames Labour for rising prices? More power to him for making a fortune from peddling his cheese, but he’s got a lot of nerve yapping about the high cost of cheese when he’s reaping the profits – typical brazen Tory hypocrisy.

  3. Disengaged 3
    8 June 2008 at 2:51 pm

    It is the rising costs of raw ingredients (ie milk and milk solids) that are to blame for the cost of cheese not price gouging by the cheese companies or their shareholders. But I guess that doesn’t fit with your demonise JK at all costs approach.

    Personally I would have thought that the cause of his smile is his, and his party’s, continued rise in the polls no matter the mud Cullen, Clark et al try and throw.

  4. erikter 4
    8 June 2008 at 2:55 pm

    “Key is making a bundle off the backs of the average Kiwi battlers trying to put cheese in the kiddies’ school lunches.”

    Are you the same people complaining about kids not getting healthy lunches?

    What’s wrong with owning shares and benefitting from them? Nothing at all!

    Only a socialist’s mindset will envy other people’s wealth. Unfortunately, that attitude is alive and well in New Zealand, and superbly represented by The Standard.

  5. Draco TB 5
    8 June 2008 at 3:03 pm

    What’s wrong with owning shares and benefitting from them? Nothing at all!

    Actually, everything is wrong with owning shares and profiting from some else’s work while you’re non-productive.

  6. alex 6
    8 June 2008 at 3:09 pm

    Draco, clearly you don’t own any shares. Owning shares is a legitimate investment strategy, either for short-term gain or long-term as a retirement fund.

    Get a clue dude.

  7. Robinsod 7
    8 June 2008 at 3:15 pm

    I think the issue isn’t that he’s making money out of cheese, alex. I think it’s that he’s cashing in on high cheese prices while also making political capital from them. Kinda having his cheese and eating it too…

  8. John 8
    8 June 2008 at 3:16 pm

    Disengaged

    That might have been a good point if it weren’t for the fact that the price of cheese has gone up a lot faster than the price of milk. Somebody other than the farmers must be profiting from higher cheese prices.

  9. alex 9
    8 June 2008 at 3:20 pm

    Robinsod, ok… your explanation makes more sense.

  10. jafapete 10
    8 June 2008 at 3:22 pm

    More on Kaimai Cheese company, recently opened by John Key. Two of the five directors are Wyatt Creech and John Luxton. Ring bells?

  11. AndrewE 11
    8 June 2008 at 3:35 pm

    Good on him. He’s a very successful man.

  12. darryl p 12
    8 June 2008 at 3:58 pm

    Cullen should declare cheese a strategic asset.

  13. Disengaged 13
    8 June 2008 at 4:30 pm

    John,

    There is more to do with the price of Cheese than just pure milk prices. Transport, finance and labour costs have also increased markedly recently.

    Draco TB: The New Zealand capital market is horrifically underfunded which is strangling the growth and productivity of a whole host of New Zealand businesses. Many businesses that can’t secure funding in New Zealand are forced to look overseas for growth capital which can then lead to those companies being sold into foreign control. We need more New Zealanders willing to take the risk and invest in New Zealand companies not less and the only reason people will take that risk is if the rewards are worth it. Calling “rich prick” on all investors is not going to help the nation grow.

  14. Robinsod 14
    8 June 2008 at 5:05 pm

    Disengaged – do you not feel it is even slightly hypocritical for Key to be invoking the price of cheese as a way of associating himself with ordinary New Zealanders while simultaneously making big bucks from that price?

  15. Jasper 15
    8 June 2008 at 5:09 pm

    That’s right Disengaged, but don’t worry, in true Tory fashion, John Key and his Dairy Investment Fund have it all covered. Looks like they are clipping the ticket all along the way from the farm to the supermarket.

    Apart from the cheese manufacturers, they also own:

    NZ Milk Trading Company Ltd
    Cheese Logistics Ltd
    Dairy Technology Services Ltd
    Dairy Trust Ltd

    Not to mention the dairy farm Key owns with his best mate Geoff Taylor of GT & Company. Dairy Investment was also doing deals on Fonterra shares a couple of years ago.

    Key’s concern about skyrocketing dairy prices is only a cynical marketing ploy aimed at vote winning, because he’s making a fortune.

  16. Robinsod 16
    8 June 2008 at 5:12 pm

    The New Zealand capital market is horrifically underfunded which is strangling the growth and productivity of a whole host of New Zealand businesses.

    Really??? I guess we better get some kind of fund together that encourages people to save money which can then be used for investment…

  17. Draco TB 17
    8 June 2008 at 5:23 pm

    Get a clue dude.

    I’ve got one thanx.

    Calling “rich prick’ on all investors is not going to help the nation grow.

    I didn’t call “rich prick’ on all investors though, did I?

    Apart from the cheese manufacturers, they also own:

    Oh, a standard capitalist monopoly then.

  18. jafapete 18
    8 June 2008 at 5:34 pm

    Robinsod: “Really??? I guess we better get some kind of fund together that encourages people to save money which can then be used for investment ”

    Damn. Beat me to it. Great guest post BTW. You should do more in that vein.

  19. Robinsod 19
    8 June 2008 at 5:37 pm

    Cheers bro but I find it’s more fun to make jokes about other guy’s mums…

  20. higherstandard 20
    8 June 2008 at 5:50 pm

    John Key is evil because he’s investing in NZ companies ……. er have you lost the plot completely ?

  21. higherstandard 21
    8 June 2008 at 6:04 pm

    On that point RS how much of the Kiwisaver fund is invested locally ?

  22. Felix 22
    8 June 2008 at 6:08 pm

    No, he’s not evil for investing in NZ companies. As has been explained (twice) above, the underlying issue is the hypocrisy of

    invoking the price of cheese as a way of associating himself with ordinary New Zealanders while simultaneously making big bucks from that price

  23. Disengaged 23
    8 June 2008 at 6:24 pm

    RS, No I don’t think that JK is being hypocritical regarding strugglinh New Zealanders. Well, no more hypocritical than other politicians in this regard. What about Ron Mark, Parekura Horomia and Dave Hereora who are all also profiting from dairy? Do they have no right to try and improve the lot of the average New Zealander?

    I agree that Kiwisaver is a step in the right direction, but it will take many years before it has a material impact. Even then it is not the complete solution to the capital problem. Private investors will always play a key roll in funding growing companies. Also retirement funds are more likely to go for “bluechip” investments rather than the riskier venture markets.

    New Zealand only has two real institutional investors at the moment, The New Zealand Super Fund (NZSF)and the ACC Fund neither of which are focused on the local market. For example the NZSF has only invested in two local Venture Capital firms and the ACC fund hasn’t made any investments in this area.

  24. Robinsod 24
    8 June 2008 at 6:37 pm

    The other politicians you listed have not made “cheese” a part of their branding exercise. It might be worth pointing out that we would have over $400bn of investment capital available if we had kept Kirk’s fund. As for your “blue chip” argument I would point out that retirement funds play a big role in private equity buyouts and the last time I looked that was at the sharp end of a lot of speculative investment.

  25. Disengaged 25
    8 June 2008 at 6:54 pm

    I still don’t see any malicious intent in Key quoting cheese. In fact one could argue that highlighting the raising price of cheese is actually not in his best (financial) interests.

    I regard the disbanding the superfund and ceasing compulsory super as one of the most criminally shortsighted policies to have ever been foist upon the New Zealand public. Regarding your point about private equity buyouts, PE funding is quite a different approach to venture funding. PE funds are typically more interested in streamlining and extracting as much value from an existing, typically underperforming or undervalued company, prior to selling it on for a profit.

    Venture funding on the other hand is generally more risky and requires greater effort on the part of the investor as it normally means that they take on a more advisory role. For the economy to grow it requires a well balanced capital market. Ie you need seed funders or angel investors willing to take a chance and invest in a business that is just starting, you then need an active venture market to help provide growth capital to get companies to the next stage. Venture investors typically look for an IPO as a means to exit so you also need a strong local stock market to support companies at that stage. Finally PE funds are important to ensure that corporations can be revitalised and continue to grow.

    Kiwisaver and retirement funds are unlikely to become involved in early stage investments so you need private investors willing to invest time and money into this area.

  26. AncientGeek 26
    8 June 2008 at 7:58 pm

    D: The good thing about the Cullen fund and Kiwisaver is that they will really only get into safer investments (as they should). However they will tend to reduce the other available equity away from those because they will suck up the available stock in those areas.

    Effectively they will tend to slowly drive up the price on local non-risky investments, thereby reducing the effective returns. This will only be part of their investment pattern to invest locally, because they will spread their risk by investing widely and that means outside our rather small market.

    However even quite small investments in the local market will push people who are willing to take more risk into investments with more risk and higher effective returns. It will take time because it takes time for the pension funds to accumulate the funds, but that is the historic pattern with pension funds offshore.

    As a medium to long term strategy to cure the local lack of risk investment it cannot be beaten.

  27. roger nome 27
    8 June 2008 at 8:09 pm

    Disengaged:

    Interesting, though isn’t the overall point that kiwisaver will deepen our capital markets, resulting in higher productivity, higher wages, higher living standards and to provide a tempering factor on inflation. ?

    I would also argue for a substantial capital-gains tax, in order to encourage private investors away from housing and toward the stock market.

    The profits made by the international banks from the mortgage industry go mainly oversees, resulting in capital leeching, leaving our capital markets shallow. It also contributes to our balance of trade deficit.

    But will Labour or National do this? Nah, they’re both paid off by westpac regularly in donations. The only party advocating for this is the Greens.

  28. Disengaged 28
    8 June 2008 at 9:32 pm

    RN: Kiwisaver will help deepen the capital market. However, I would argue that the overall point of Kiwisaver is to provide for the retirement of the average New Zealander. To achieve that the fund managers naturally look towards safer and more long-term focused investments. The correct strategy and I have no argument with that approach. However, growing businesses are an inherently risky proposition and require funding from those with the experience and financial fortitude to take those risks. Higher living standards and sustainable wage growth can only come from increased productivity acheived through company growth. Kiwisaver won’t provide the impetus for that to happen on its own.

    I agree that New Zealander’s predilection for real estate investment is putting pressure on our capital markets, but I don’t think that a capitial gains tax will be the panacea that you think that it will be. I would much rather see the favourable deduction status that investment properties current enjoy removed along with their eligibility for LAQC. Doing that is a more simple approach than adding yet another tax.

  29. roger nome 29
    8 June 2008 at 9:57 pm

    “Disengaged”

    Well i guess you’re arguing that KS is a good thing then. We agree.

    “Higher living standards and sustainable wage growth can only come from increased productivity acheived through company growth.”

    “Company growth” can happen a way that doesn’t result in productivity increases. i.e. if the ratio of investment in labour is significantly higher than the ratio invested in capital. This tends to happen when Labour is cheap, which has been the case since National introduced the Employment Contracts Act. This in-part explains NZ’s slow productivity growth rate since the early 1990s.

    Another primary factor, i beleive, has been over-investment in the property market. One way or another the fundamentals need to be changed so this stops.

  30. insider 30
    9 June 2008 at 12:13 am

    this has got to be one of the lamest envy posts you guys have done. It is very sad such smart people need to scrape the barrel bottom so aggressively.

    Is that all you’ve got?

  31. r0b 31
    9 June 2008 at 12:30 am

    Is that all you’ve got?

    That’s exactly the question that the electorate is starting to ask John Key.

    As for us (if I may be so bold as to speak on behalf of the Labour Party for a moment), we’ve got smart experienced leadership, a record of 9 years of strong government and solid achievements, a large and highly committed activist base, and an abiding desire to make it four in a row.

  32. Phil 32
    9 June 2008 at 7:40 am

    Last time around, Cullens non-tax-cut package was “chewing gum”. I’m sure you’re going to tell me JK has a controlling interest in Wrigleys as well.

    “a large and highly committed activist base”

    Commited to what, exactly? There is a lot of old war-horses in Labour, and I wonder just how commited they are? Remember, these are the same people who campaigned half-heartedly and threw Moore to the wolves. With the economic headwinds over the next couple of years, I think Labour would be more than happy to lose this one.

    Oh, and you forgot to add to the list; ‘enough electoral baggage to make Carrie Bradshaw look like she’s packing light for a weekend in the Hamptons’

  33. r0b 33
    9 June 2008 at 9:17 am

    There is a lot of old war-horses in Labour

    Neigh there Phil – on the other hand the Young Labour cohort has never been so large and active. Experience and the energy of youth! Excellent.

    I think Labour would be more than happy to lose this one.

    Nope.

    Oh, and you forgot to add to the list; ‘enough electoral baggage

    Tee hee. I’ll admit to some “baggage” after 9 years, but compared to other “end of third term governments”, which are usually visibly self destructing at this point, the current government is still tight, focused, and getting on with doing a good job. If we lose this election we will lose it well, and no need for many terms in opposition.

  34. Disengaged 34
    9 June 2008 at 9:51 am

    RN:
    “Well i guess you’re arguing that KS is a good thing then. We agree.”
    Yes, Kiwisaver is a good thing. It would be better if it was made compulsory, but it does make sense to incentivise people to begin with.

    “”Company growth’ can happen a way that doesn’t result in productivity increases. i.e. if the ratio of investment in labour is significantly higher than the ratio invested in capital. This tends to happen when Labour is cheap, which has been the case since National introduced the Employment Contracts Act. This in-part explains NZ’s slow productivity growth rate since the early 1990s.”

    Blaiming the ECA for “cheap” labour and New Zealand’s low productivity is being a little simplistic. New Zealand’s industry has historically been based on primary products. Primary industries, by their nature, are more labour intensive than those industries higher up the value chain. Artificially raising the cost of labour, through unsustainable rises in the minimum wage, is not the answer to incentivising companies to invest in more technology. It is however, an excellent way of incentivising companies to move offshore. Things like the R&D tax credits and changing the depreciation limits on capital expenditure make a huge difference to moving New Zealand companies up the value chain and I believe the government should also incentivise universities, CRIs and business to work closer together in this regard.

    “Another primary factor, i beleive, has been over-investment in the property market. One way or another the fundamentals need to be changed so this stops.”

    Yip couldn’t agree more.

    Anyway, sorry for dragging this miles off topic.

  35. ants 35
    9 June 2008 at 1:19 pm

    You forgot to mention the most obvious point – “and a doctorate in rhetoric”

    “As for us (if I may be so bold as to speak on behalf of the Labour Party for a moment), we’ve got smart experienced leadership, a record of 9 years of strong government and solid achievements, a large and highly committed activist base, and an abiding desire to make it four in a row.”

  36. Mr. Farty Pants 36
    10 June 2008 at 12:20 am

    “Open Country Ltd lists Colby, Cheddar, Gouda and Edam in its product line sold in New Zealand and abroad.”

    So that’s why he was on the radio today saying “buy colby instead of tasty”.

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