
Govt should scrutinise Fonterra's role in rising food prices
And surely perspective has been lost. I was there to publicly promote the idea that vaccinating older adults against common diseases would pay off for both the health system and society generally.
While that is just one contestable policy idea amongst many, Parliament itself seemed largely consumed by the utterance, not once but twice, of a particularly vile swear word; plus the antics of one of the minor parties, Te Pāti Māori.
There is a legitimate debate to be held about parliamentary and journalistic standards, both of which have been woefully dropping, in my opinion.
In Parliament's case this is no doubt damaging the standing of the institution, which must surely concern those who are giving up their lives to serve in it.
But I doubt it means a hill of beans to the average voter, beyond a general level of disgust.
The public right now are mostly interested in the economy and their jobs, and the cost of living. Those are surely how most will weigh their vote at the next election in about 16 months' time.
With that in mind, next week in Parliament will be much more consequential than this one, as Nicola Willis delivers her second Budget.
She has to keep spending under control, place increased emphasis on value for money, show a path back to surplus, and set the economic climate for more growth.
And all in the shadow of an American President who is not helping anyone as he publicly learns the immutable laws of economics.
It is a daunting task. I think back to the nine Budgets I was involved with alongside Bill English, and this one would be at least as difficult as any of those, which included of course at one stage grappling with both the Global Financial Crisis and the Canterbury earthquakes.
I think there is broad public understanding, if not acceptance, about what is required. Much of the debate over the last week, and indeed much of the vitriol, has been directed at the Government's watering down of the pay equity legislation, which had previously been expensively beefed up by the previous Government.
While there will be plenty of people who disagree with the change, or perhaps how it was enacted, there will nevertheless be a more general acceptance that we can't go on spending beyond our means, and that there are and will be any number of other savings initiatives required.
The Government should not be afraid of levelling with people about the changes needed.
In political terms the opposition is helping, with its stance that pretty much all public spending is sacred, along with the release of pie-in-the-sky alternative budgets completely disconnected from reality.
The Government should refrain from too much premature politicking and electioneering. There will be plenty of time to compare policy prescriptions between now and the election.
Next week should be all about making the case to the New Zealand public that they are taking the right steps to restore New Zealand's fortunes.
The Budget has been locked away for a couple of weeks, and it will be what it will be. But a Statistics New Zealand release on Thursday underlines that there is more work for the Government to do about the public's other main area of concern, the cost of living.
While inflation altogether is trending down, there are two key exceptions, the cost of food and the cost of electricity.
Ministers are working on both fronts, but decisions have yet to be made and seem to hang in the balance. It is clear, for example, most of the electricity gentailers are fighting a strong rearguard action against changes to electricity market settings, as you would.
The Government has also taken the long rhetorical handle to the supermarket industry, and fair enough. But there is one area of cost increases where they have been noticeably quiet.
It is clear one of the biggest contributors to food price increases is dairy products. A 500g block of butter is costing consumers a whopping $3 more than it did a year ago, while milk is up 15% and cheese up 24%. Those are hefty in anyone's language.
The conventional response of farmers and Fonterra to such price increases is to shrug and talk about the influence of world dairy prices. Which is true to a point, but not the whole story.
Fonterra is a Government-sanctioned near-monopoly, which controls about 80% of the milk collection in New Zealand. And it is only partially regulated.
The laws around it focus on the farmgate milk price, to ensure farmers are treated fairly, and retail regulation, to ensure there are options for retail competition.
The gap, which the Commerce Commission has highlighted from time to time but over which it has little influence, is the cost of dairy processing.
Nobody really knows whether Fonterra's factories are as efficient as they could be, and whether consumers here are paying a fair margin for that cost of production.
Put it this way. If there was genuine competition on the processing side, we'd know whether Fonterra was doing the best job it could for New Zealand consumers or not. The current way we are just guessing.
It is a little incongruous that the Government is so focused on the supermarket trade, which is at least a competitive duopoly, and the electricity market, which is an oligopoly, but silent on dairy processing.
It is time to take a look. There may be nothing to see here, as I'm sure Fonterra leaders and shareholders would say, but as Fonterra readies itself to sell off its consumer brands, there could hardly be a better time to have a closer look at what is happening under the processing hood.
And consumers would surely thank the Government if there was some downward pressure on dairy prices in their weekly shop.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Scoop
2 hours ago
- Scoop
New Zealand Food And Fibre Exports On Track To Break New Records
Minister of Agriculture Minister of Forestry Farmers, growers, foresters, fishers and primary processors are driving New Zealand's economic recovery with export revenue on track to surpass $60 billion for the first time, Agriculture and Forestry Minister Todd McClay announced today at Fieldays. 'The latest Situation and Outlook for Primary Industries (SOPI) report forecasts export earnings of $59.9 billion for the year ending 30 June 2025, $3 billion higher than projected in December. This momentum is expected to continue, with exports reaching $65.7 billion by 2029,' Mr McClay says. 'These figures reflect the hard work and resilience of the hard working men and women of provincial New Zealand. 'Strong global demand and healthy prices across key markets are positioning our high-quality, safe and sustainable food and fibre exports for record growth.' Growth highlights include: dairy export revenue lifting 16 per cent to reach a record $27 billion meat and wool export revenue increasing 8 per cent to $12.3 billion horticulture export revenue growing by an impressive 19 per cent reaching $8.5 billion forestry export revenue jumping 9 per cent to $6.3 billion Seafood export revenue lifting 2 per cent to $2.2 billion. 'The numbers speak for themselves, but the Government remains laser-focused on doubling the value of exports in 10 years, driving higher farm and forest gate returns, and backing the long-term capability, resilience, and health of rural New Zealand,' Mr McClay says. 'We're investing heavily to deliver tools and technology to farmers and growers to tackle agricultural emissions with more than $400 million in continuing funding over the next four years and making targeted reforms to support farmer and grower success. 'Through the Budget, we launched the new $246 million Primary Sector Growth Fund (PSGF) to boost on-farm productivity and resilience. 'Our trade work continues at pace to open doors for Kiwi exporters, and our new Investment Boost tax incentive will encourage businesses to invest, be more competitive, grow the economy, and lift wages. 'When rural New Zealand does well, the whole country benefits,' Mr McClay says. 'That's why we're making sure our Primary Sector have the tools and support they need to deliver long-term economic growth and regional prosperity for all New Zealanders.'


Scoop
2 hours ago
- Scoop
Wool Carpets For State Houses A Win-Win
Minister for Economic Growth Hon Mark Patterson Associate Agriculture Minister The return of wool carpets to state homes has been welcomed by Economic Growth Minister Nicola Willis and Associate Agriculture Minister Mark Patterson. State housing agency Kāinga Ora announced today that from next month, a new supplier agreement will deliver woollen carpets for the fit-out of new state homes. 'The decision is great news for sheep farmers, and all the New Zealanders whose jobs and incomes are tied to the fortunes of our world-leading wool industry. 'The Government wants wool producers to have more opportunities like this, which is why in March we issued a directive to 130 Government agencies requiring them to purchase woollen products for building construction and refurbishment, wherever practical and appropriate. 'Kāinga Ora's new supplier agreement was made possible because the agency chose to re-open an initially nylon-only carpet tender and give wool a chance to compete. 'I'm told woollen carpet manufacturers responded very strongly to that opportunity and that the new carpet supply agreements come with no additional cost. 'The message is clear: When wool was put back on the table it more than held its own, delivering value for taxpayers and a win for sheep farmers. 'This proves the value of the Government's moves to give wool a fair shot in publicly funded procurement decisions. 'We have directed that from 1 July all public entities must use woollen fibres, where practical and appropriate, in government buildings. The new policy, announced in April, directs agencies to identify opportunities to use woollen products, and to properly consider a range of factors in procurement including whole-of-life cost, sustainability and health benefits. 'We're leveraging government spending to back the wool industry and the New Zealand economy. I hope private businesses will follow our lead.' Mark Patterson says the move continues to deliver on a New Zealand First and National Party coalition agreement to prefer the use of woollen fibres in government buildings. 'Woollen fibres create safer, healthier and more sustainable living environments for families. 'We know farmers will share our enthusiasm about this announcement. It is another example of us doing our bit. The Government is determined to help lift the fortunes of the strong wool sector in supporting our sheep farmers' Mr Patterson says. Notes The total value of the new Kāinga Ora contract is commercially sensitive and so can't be disclosed. Kāinga Ora is expected to fit out about 4500 homes in the next three years. Some contracts for carpet in homes have already been let, but under the new supply agreement, newly contracted fit-outs will be met through the wool-carpet supply contract. Where nylon carpet has already been installed in existing homes Kainga Ora will continue to use nylon carpet for single room or smaller patch repairs.


Scoop
3 hours ago
- Scoop
Ongoing Russian Strikes Continue Alarming Civilian Casualty Trend
11 June 2025 The toll includes 1,389 casualties in April (221 killed, 1,168 injured) – the highest monthly total so far this year – followed by 1,019 in May (183 killed, 836 injured). Casualties were reported across 17 out of 24 regions and the city of Kyiv, including areas far from the frontline. The vast majority of attacks (97 per cent) led to civilian casualties occurred in areas under Ukrainian Government control. 'This year has been devastating for civilians across Ukraine, with significantly more deaths and injuries than during the same period in 2024,' said Danielle Bell, Head of the HRMMU – the monitoring mission set up by the UN rights office, OHCHR, at the invitation of the Ukrainian Government. 'The intensification of long-range attacks with missiles and loitering munitions and frequent attacks with short-range drones along the frontline are a deadly combination for civilians.' Weapons and impact Long-range missile and drone attacks caused the largest proportion of civilian casualties – some 28 per cent of casualties during May. On the other hand, short-range drones remained the leading cause in frontline areas. Russian armed forces carried out at least five attacks on port infrastructure in the Odesa region on the Black Sea, resulting in civilian casualties and damage to facilities. One such attack on 23 May killed three men and injured 12 more, including port workers, according to the report. Continuing trends in June The mission noted that long-range attacks have intensified this month. Since 6 June, Russian forces have launched over 1,500 long-range weapons, according to Ukrainian authorities. The HRMMU is in the process of verifying reports that these attacks (or subsequent falling debris) have killed at least 19 civilians and injured 205 others nationwide in just a five-day span. If confirmed, June could match or surpass April and May in total casualties. ' At this pace and scale, further loss of civilian life is not just possible – it is inevitable,' said Ms. Bell.