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Milked

Written By: - Date published: 7:51 am, February 17th, 2011 - 47 comments
Categories: food, human rights - Tags: , ,

What is happening to this country?

Milk’s on the luxury list

The country’s biggest supplier is warning milk prices are about to go higher, and medical experts fear the cost of a daily glass is already out of reach for some.

Dairy giant Fonterra today warned supermarket prices could surge further following the sixth consecutive rise in prices on its online globalDairyTrade auction this morning. …

Today at Countdown, Anchor-branded milk cost $4.80 for a 2-litre bottle. In June 2009 in was $3.94 for the same amount.

By comparison, the same supermarket has a 2-litre bottle of Coca-Cola for $3.99 and a 2.25-litre bottle of Coca-Cola for $3.57 (currently $2.79 on special).

Medical Officer of Health for the Waikato District Health Board, Felicity Dumble, said it was a concern when milk was dearer than soft drinks. …

Liam Whaley, a sharemilker on a Ngatea dairy farm, said it was unfortunate Fonterra – which exported 95 per cent of the milk it collected – sold the rest within New Zealand for the same price it would fetch on the international market.

“We sell our milk for about 80 cents a litre to Fonterra. They have got to transport it, process it, package it, market it and distribute it. Somehow along the line it goes to $2.40 a litre. I certainly think they could go a little easier.”

Bugger the free market. Our wages are so low that we can’t keep paying “international prices” for basic necessities. Fonterra should be required to sell milk to the domestic market at cost plus a small margin (10% ?). Similarly for other exported foodstuffs. GST off food is just tinkering at the edges. Will any political party propose real action?

47 comments on “Milked”

  1. Jim Nald 1

    Extract from Key’s Memoirs:

    New Zealand is a land flowing with milk and honey. Just not for you, Kiwis.

  2. I think Fonterra is abusing its monopoly position.

    They say we’re just paying the world price but our milk is on sale in the UK for half the price, despite the transport costs and higher overheads for retailers over there. I don’t think that bulk buying accounts for that difference, especially since Kiwi retailers are buying huge amounts too.

    The difference is that over there Fonterra faces competition.

    • Colonial Viper 2.1

      So a NZ farmer owned co-op is screwing NZ’ers?

      I bet you the NZ sales division of Fonterra has agreed to corporate targets written by H/O which require them to sell at this elevated price.

      I wonder what their local margins per L actually are.

    • The Economic Illiteracy Support Group 2.2

      I think Fonterra is abusing its monopoly position.

      No, actually I don’t think it’s a case of market dominance – put more simply, Fonterra are sociopaths. They clearly see no need to contribute in any way to the society that allows their 11,000 farmers to make windfall profits. They expect taxpayers to subsidise their dirty dairying practices, pay for their emissions and offer up local water supplies, but refuse to contribute to the health of the society they are looting.

      And they’re also hypocrites. If they want to quote the free market when it comes to retail prices, then they can put their money where their mouth is and start paying their way on the Emissions Trading Scheme, forthwith.

    • Matthew Hooton 2.3

      NZ and Fonterra don’t sell any milk in the UK at all, let alone “for half the price”. What are you talking about?

  3. stever 3

    Milk in Sainsbury’s in the UK (their own-brand is UK-produced milk) is about $2.20 for two litres!

    So, apart from the price we pay being very high given our incomes, where does this leave Fonterra’s claims to be such an efficient producer if the UK farmers produce milk for this price on the shelves?

    • Rosy 3.1

      Uk farms get subsidised http://farmsubsidy.org/GB/ including dairy farms
      e.g. In 2008 United Kingdom received €3,755 Million in EU farm subsidies or approximately €12,517 per farm

      There is a list on the above site of all the farm subsidies they can track in the EU.

  4. Shona 4

    In the Far North Fonterra bought out and shut down the local independent Top Milk dairy factory that produced affordable milk for generations of NZers. They are as aggressive and greedy as any corporate giant. Whangarei still has a local producer that sells 2litres@ $ 3.50 . And the product is vastly superior to any produced by the conglomerates. Cow and Gate is another cheaper brand think it comes from the Sth Is.
    Northland has fewer dairy farms than 20 years ago. It is far more suited to dairying than Canterbury. The land is cheaper up here but the infrastructure for dairy has shrunk over that time up here. Nonsensical.

  5. the sprout 5

    Fonterra chief executive Andrew Ferrier said this week that prices for whole milk powder will probably stay at least 50% above their long-term average on rising demand from emerging markets. He told Bloomberg News that higher prices “are the new normal” and further gains are likely “before we start burning off demand.”

    http://www.scoop.co.nz/stories/BU1102/S00335/milk-powder-rises-39-to-highest-since-online-sales-began.htm

    “further gains” eh…

    I agree r0b, something does need to be done about Fonterra. We the public all pay for Fonterra’s ongoing pollution of our environment and degragation of our international reputation, yet we the public get nothing back except higher and higher prices for their products and a bit of the euphemistic golden ‘trickle down’.

    • Bored 5.1

      Well said Sprout. Add it to TEISGs comment about their sociopathic tendencies it does not paint a pretty picture of this industrial sector. Another example of cartel / rentier behavoir. Nationalise?

    • Colonial Viper 5.2

      Hey Ferrier gets paid a pretty penny eh? Not for helping the bottom half of income earners in this country put milk on the breakfast table though.

    • The Economic Illiteracy Support Group 5.3

      the euphemistic golden ‘trickle down’

      the euphemistic golden ‘trickle down’ == they’re pissing on us.

  6. Bill 6

    The free market’ ideology maintains that it doesn’t matter whether we can or cannot afford basic necessities. The ‘free market’ ideology maintains that it’s a good thing for poor people anywhere to produce goods for rich people anywhere (elsewhere). Which means that improving the economic wellbeing of people producing and consuming within a defined national border (domestic economy) runs counter to ‘free marketism’…ie it’s bad for competitive advantage.

    I think you are quite right to suggest that we ‘Bugger the Free Market.’

    But I’m curious as to what real action would entail, should any government undertake any.

    Reneging on free trade deals and refusing to comply with any onerous judgements passed down from the WTO? Copping runs on the currency or whatever else international investors would inflict on NZ? Withstanding the oppobrium of corporate media operating in NZ (ie almost all media)? What else? Threats of sanctions?

    It bemuses me that people call for subsidies as though that’s ‘allowed’ under WTO rules. And what now for all those people who were quite happy for domestic production to shut down as long as they were given the ‘choice’ of cheaper imports?

    • Bored 6.1

      Bill, the bemusement all starts in the tacit acceptance of the “market” model by our high preists, the economists. Proponents of the market attribute the market with powers that determine our destiny. Like God the deity that is the market is infallible. This faith in the abstract is closer to the unthinking behavoir of theocracies to whom the “recieved word” of God is law, not to be questioned.

      The problem I have with the market is the same that I have with religion. Why are we expected to serve God, to accept the will of the market? If God does not serve us he is of no use. The same applies to the “free” market. If it does not do what we want it to do it is of no use.

      Intervention in this case is the only option. Regulate the shit out of them.

      • Colonial Viper 6.1.1

        Government to go in 50/50 with independent milk producers, help them re-capitalise, increase competition in the market place. As those milk producers become profitable, Government can take a fair dividend but being on the BoD can also direct that fair margins to the market be maintained.

        Order Fonterra to reveal its internal NZ wholesale and retail operating margins for 3 years to give new entrant competitors an advantage.

        Minimum other regulation required.

      • Bill 6.1.2

        Different interventions to the ones currently employed is one option. And regulating ‘the shit out of them’ is definately a market based solution that would improve our situation.

        One of the old neo-liberal mantras came to mind concerning all of this. Remember how they repeated ad-nauseum that there could be ‘no gain without pain’ as they set about transferring all our wealth to them (ie, we got the pain while they got the gain)?

        Well, to get out of this mess will entail pain but then, we’re already experiencing pain. So it might be appropriate to think of the pain to be endured as that of the yank on the dislocated joint. And then we get the gain. For once.

        But how to convince people when all the major lines of communication are controlled by or serve interests that would insist it’s best if things are left alone and that time will heal…ie advocate more of the same?

      • Olwyn 6.1.3

        I think the free marker only functions as a religion among some academics, and sometimes as a sop to the peasants. On the ground it is about social control, acquisition and dispossession. If the free market god had proved unable to provide justification and support for these things, another god would have been sought, with the social-Darwinist god filling in until a better one was found – preferably one involving grave and arcane religious symbols; big sigmas, imaginary numbers and that, so the peasants know that they’re up against some serious stuff.

  7. Bored 7

    Bill, to your second question: what action to take back sovereignty from the plethora of punitive instruments, impediments, treaties etc poses a real issue. We are so tightly tied in to the status quo that it seems imposible to leave. My suggestion is that we fight the status quo on a number of front one bite at a time.

    First up, change the tax laws to make offshore profits harder to get at. Then erode a few trade deals. Put some local regs in to make it hard to certify imports against things like safety standards. Erode at the edges, erode. Thats the slow approach. Just be plain difficult so that the cost of sale to us is just not commercially viable unless we want it to be. In parallel build a local central bank to take over credit creation and erode the market share of the big banks locally.

    Thats the passive fight, a little at a time. The active fight is to make bold steps based upon opportunities that arise out of the dislocation that the world economy goes through as it falls apart with the end of oil and the ramifications of the financial crisis (that is far from over). Unilateral deals that say fekk you to the status quo. The South Americans are writing the book on this.

    • Colonial Viper 7.1

      We need steps to bring more members of the public onboard – 5% more of the population would suffice. 220,000 newly aware and informed peeps.

      And we need our own well publicised media channels.

      Would be interesting to do a study of how Twitter, FB, google groups, etc. could be used to communicate amongst a mass of people when the official mass media is under firm authoritarian control.

      Why…didn’t we see something like this in action recently 😉

      To my mind blaming a Right leaning mass media is no longer an excuse – it has been shown that there are new tools which when combined with old tools are effective in the real world.

      • Puddleglum 7.1.1

        On mediawatch a couple of weeks ago (I think), that AUT journalism chap (Hirst?) said he’d actually started a Trust aimed at buying control of the New Zealand Herald at some point. I have no idea how it’s going other than that, but you might want to listen to the interview for a start. It’s about 18m:40s into the audio and the bit about the Herald is towards the end of the interview.

    • Bill 7.2

      I’m all for Bolivarian inspired solutions. But you know that.

      Argentina defaulted on its international debt and faced down threats from international investors etc. And the government of Venezuela enables genuine worker control of industry. If industry doesn’t play ball and cater for the domestic population they are warned and eventually ex-appropriated by the state (with compensaton paid) and passed on to the workers to run.

      Only problem is that workers operate on old habits, therefore don’t or can’t necessarily embrace the reality of democratically run workplaces and can wind up re-establishing old ways of heirarchical management systems through appeals for a state run industry option or by allowing the old managers to maintain their monopoly on information and decision making etc.

      • Colonial Viper 7.2.1

        On the other hand, fully self managing work teams have been a staple of Toyota manufacturing plants for 25 or more years.

      • Bored 7.2.2

        Interesting on the facing down of debt: the international conventions follow the Golden Rule (he who has the gold makes the rules). In the case of being indebted you can invoke the opposite “he who has no gold cant pay”.

        There is a commercial version of this which goes “let the buyer beware”, any risk on debt needs to exist firmly from the person loaning the cash. Not the person borrowing.

        • Colonial Viper 7.2.2.1

          Someone should have told the politicians who authorised billions in bankers bail outs, making the final holders of the risks (but not the profits) Joe and Jane Public.

  8. Lanthanide 8

    I think Labour should sieze this talk about milk prices to make a stand. They can say:

    * If we win the election, we will institute a broad-ranging investigation into the price of staple foods in New Zealand, especially for food growing locally compared to the price abroad. We promise to make changes to reduce the cost to everyday NZers.
    * We will remove GST from fruit and vegetables to help the average NZ feed their families.

    I think the only spin National could come up with for that is “government meddling in the economy”, but for the average NZer who can’t afford the staples, I don’t think they’d care that this is somehow ‘a bad thing’.

    • Colonial Viper 8.1

      I suspect Government meddling in the economy on behalf of citizens is better than large corporates meddling in the economy on behalf of profit taking shareholders.

  9. Akldnut 9

    Multi National – Multi National – Multi National
    Monopoly – Monopoly – Monopoly
    Free market – Free market – Free market
    Money – Money – Money
    Capitalism – Capitalism – Capitalism
    Not much else to say unless we come up with a better system to work live in.
    This ones broke and any amount of tinkering don’t fix it.

    • Colonial Viper 9.1

      Globalisation – Globalisation – Globalisation
      Growth – Growth – Growth

      You are right. Capitalism has got us this far over roughly 200 years. But its time to move on to a new system, this one is not suiting the needs of >50% of the people in western countries. And far less in developing and third world countries.

  10. djp 10

    Haha, Yeah the govt should step in and and impose price controls. Then 100% of NZ dairy production would be exported with no incentive for anyone to enter the domestic market with a shortage of milk following.

    Seriously Rob you should learn about price signals and also look into what happens when other governments impose price controls.

    • Colonial Viper 10.1

      Good to see someone here likes ensuring foreigners will be fed with our milk even if New Zealanders can’t afford any for themselves.

      Seriously Rob you should learn about price signals and also look into what happens when other governments impose price controls.

      Simply index the price of NZ milk to that of UK milk. Easy as that. If Fonterra want to bug out of the market, let them. Independent suppliers 50% owned and capitalised by the Govt will step in quickly enough.

    • Lanthanide 10.2

      “Seriously Rob you should learn about price signals”

      Yes, we know about price signals. The price of milk is signalling that it is now a luxury to many NZers, and more expensive than coke.

      That’s the problem.

  11. cardassian 11

    I buy 4 pints of milk for 1 pound over here in London.
    You’re getting severely ripped off at those prices back home.

  12. Rosy 12

    The politics of diarying are getting quite interesting. As with the McKenzie country factory dairy plan here that was scuppered, the UK environment agency have also denied permission to build a factory dairy farm. At some level milk prices need to reflect the resources they use and animal welfare, but there is a strong political tension with the need for cheap nutrition and at the moment milk is it. At some stage this is going to have to be thought through.

    “The original plans for the UK’s largest dairy farm would have meant 8,100 cows being housed on a single site at Nocton Heath. Opponents labelled the proposal as “the equivalent of a battery chicken farm for cows”.
    That application was withdrawn last year, but the two farmers behind Nocton Dairies re-applied in November with a plan involving less than half the number of cows.”
    http://www.guardian.co.uk/environment/2011/feb/16/lincolnshire-mega-dairy-farm-plans-withdrawn

  13. Don 13

    My Dog is a Jack Russel cross and loves milk but doesnt like Flopterra the price just lays him out .Thats about all Fonterra does for rest of us. when their looking for a new name for NZ JUST CALL IT FONTERRA NORTH &SOUTH becuz democracy has been sold to the free market at a huge life cost to NZERS

  14. Drakula 14

    Tha best way we could demomstrate our opposition to Fonterra’s sociopathic monopoly is to not drink their milk!!!!!!

    A few weeks ago I had a bit of a bug, so I have stopped putting milk in my tea and there are ways to make black tea’s very delicious. Here are a few tips:
    (1) Don’t stew the tea and make it a bit weaker than usual.
    (2) You can make a very delicious spice tea by adding half a teaspoon of five spice to the pot.
    (3) You can also make herb tea by putting the following in your pot or cup, like lemmon balm, spear mint, fennel or annis seed, lemmon leaves, manuka leaves or even gum leaves.
    (4) I have even made a combination of spice and herbs and put the pot into the fridge and it’s very refreshing whenit is hot.
    (5) I have even made a hot herb to warm you and thin the blood (lowering blood pressure)
    one tea bay half a teaspoon of 5 spice and a quater teaspoon of chilli powder and a little raw suger.

    So there you are who needs Fonterra? and isn’t it ironic the Chinese hav been drinking these tea’s for thousands of years!!!!!!!

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