Fonterra rules out discounted butter for Kiwis

Otago Daily Times

24-07-2025

By Anan Zaki of RNZ
The head of dairy giant Fonterra says the co-operative cannot and will not have different butter prices for local and overseas customers.
It comes amid soaring prices for the household staple, with Stats NZ data showing the price of a 500g block of butter rising 46.5 percent in the year ended May.
Kiwis not getting a 'raw deal' on butter: Willis
Other dairy products such as milk and cheese have also recorded steep price increases amid global demand.
Fonterra chief executive Miles Hurrell fronted the media in Christchurch on Thursday, after a highly publicised - but regular - meeting with Finance Minister Nicola Willis on Tuesday, where the pair discussed the price of butter, amongst other things.
He sympathised with households feeling the pinch but said price increases were a reflection of supply not being able to keep up with demand.
Hurrell said for a block of butter at the supermarket, roughly 80 percent was determined by the international market.
He said globally there was a growing need for both dairy fats and dairy protein, underpinned by strong demand from China and other nations.
Hurrell rejected that Fonterra had a social responsibility to offer cheaper products to local consumers.
"We know we have an obligation to sell here in New Zealand, and we do that, and we support the New Zealand economy," he said. "But our job is to not come in with a two-tier pricing system ... and discount here in the New Zealand market - where we have an international obligation to operate as well," he said.
"If you're going to get into discounting by product - this is not a game that we're playing."
Hurrell said Fonterra's responsibility was to its farmer suppliers, a comment he had made earlier.
"We're a co-operative, and our job is to go and support the 8500 family farms that we support here in New Zealand," he said.
"I know for a fact that when they get their share of $25 billion [in estimated] revenue that comes back, they do a heck of a lot ... to support their own communities."
He said strong dairy prices were in fact a "good news story" for the New Zealand economy.
"It talks to the economic recovery that I know the New Zealand government have been talking about."
Recent economic data showed annual inflation rose to its highest level in a year in the June quarter, partly driven by food prices, which in turn, were driven by dairy prices.
Hurrell said the final prices on local shelves were set by retailers, who set their own costs and margins.
He said he explained all of this to Finance Minister Nicola Willis on Tuesday. Supermarkets working to keep prices 'as low as possible'
In response to the strong public debate around the price of butter, Woolworths New Zealand - one of the country's two big supermarket operators, said it was "working hard to keep butter prices as low as possible, for as long as possible".
"Market conditions have changed significantly in the last few months and international butter prices are now at record highs," a spokesperson said.
"While this is great news for our farmers, it does mean we have to pass on these increased prices to our customers, which is why we've changed the shelf price for butter products," they said.
Foodstuffs North Island - the operator of Pak'nSave and New World - referred RNZ to previous comments made by chief executive Chris Quin on social media last month.
"Analysis as of May 2025 confirms that among major grocery retailers operating throughout the North Island (as distinct from those in a limited number of locations), Pak'nSave offers the most affordable 500g block of butter, at $8.29," Quin wrote.
Quin said while tough for households, strong global dairy prices were "ultimately good for New Zealand's economy".