Changes to dairy regulation won't make milk cheaper

None of the proposed changes to the Dairy Industry Restructuring Act will reduce the retail price of milk.

“Not one of the changes proposed to the Dairy Industry Restructuring Act, or its regulations, will make milk any cheaper in the supermarkets,” says Willy Leferink, Federated Farmers Dairy chairperson.

“As I heard interest.co.nz’s Bernard Hickey say on the radio the other day; anyone who wants cheap milk knows exactly where to buy it. One of our Wellington staff members tells me Karori New World has been selling two litres for $3, as long as you spend $25 in-store.

“At that price, it is identical to what Cole’s has been selling milk for in Australia, once you take out our GST and exchange rate differences.

“What concerns me is that people seem to think farmers get all of the value from retail milk sales. I can tell you our share in a one litre carton of retail milk is around 360 millilitres.

“If someone’s skimming the cream I’d suggest looking harder at the wholesale and retail ends. How come Karori New World can sell two litres of milk for $3 but another New World sells an identical bottle for $3.72?

“That’s where the margins are, instead of the farmer who produce the milk in the first place.

“So what people need to really ask of the Government and of proposed changes to the DIRA is this; where is the domestic competition? Not just at the supermarket but for farmer’s milk itself.

“Precious few of the processors who take this milk, bottle it and then put it onto the shelves of supermarkets or dairies. Too few of these processors get milk from the farmgate and compete locally as they do internationally. We really need to know why,” Mr Leferink concluded.