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Kiwis not getting a 'raw deal' on butter: Willis

Kiwis not getting a 'raw deal' on butter: Willis

Otago Daily Times20 hours ago
By Giles Dexter of RNZ
The Finance Minister does not believe New Zealanders are getting a "raw deal" on butter, but has accepted there is no getting away from how expensive it is right now.
Nicola Willis met Fonterra's chief executive Miles Hurrell at Parliament on Tuesday evening.
While the two meet regularly, there was increased interest in the meeting due to the current price of butter. Willis had earlier said it was something she would discuss with Hurrell.
Characterising the meeting as "constructive and engaging," Willis said Hurrell was candid about the way butter was priced in New Zealand.
Her summarisation of her meeting with Fonterra largely zeroed in on her drive to increase supermarket competition.
The large proportion of what people pay for butter is dictated by global demand, which is something the government could not control.
"Were that price to come down, you would expect that to be reflected in the prices that New Zealand shoppers pay," Willis said.
Hurrell had told her that butter had once been the hardest product for Fonterra to sell globally, but the increasing demand was due to reporting on its health benefits.
"It was once viewed as a bogeyman," she said.
The meeting had reinforced Willis' interest in increasing supermarket competition to put downward pressure on the price of butter.
"All roads lead back to supermarket competition. I continue to believe that is the most powerful lever that the government has on this issue. We will never be able to control global dairy prices. What we can influence is the amount of competition in New Zealand's grocery sector and we have a lot of work under way to address that."
Fonterra had also observed the supermarket competition.
"Miles specifically conveyed that Fonterra operates in a number of markets around the world, most of which have a more competitive supermarket sector, and that it does feel different in New Zealand."
She would leave it to supermarkets and Fonterra to argue who was charging what margin.
"The sense that I got from my engagement with Miles is that it's a constant battle between them. Each party are probably going to point fingers at the other."
Hurrell would not answer questions when RNZ approached him outside Parliament on Tuesday night, but a Fonterra spokesperson said the meeting was "constructive".
Willis said she had encouraged Hurrell to front, in particular to explain what proportion of the margins go to Fonterra and what goes to supermarkets.
Acknowledging that Fonterra's job was to get the best possible price for its shareholders, Willis also accepted New Zealanders saw the downsides of that when they were shopping.
"I've been satisfied that I don't think consumers are getting a raw deal. I think that there is good work going on to ensure that there is pressure and competition from Fonterra to try and keep its prices low. But I get it. Butter is expensive right now. There's no getting away from that."
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