Latest news with #Hurrell
Time of India
a day ago
- Business
- Time of India
Will butter prices come down? Fonterra says global demand is pushing it up, rules out cheaper rates for New Zealanders
New Zealand's biggest exporter of dairy products, Fonterra , has defended the rising cost of butter in New Zealand, saying strong global demand drives prices and generates significant revenue for the national economy. This implies that the co-operative cannot and will not have different butter prices for local and international customers. Speaking to the media, its chief executive, Miles Hurrell, said after a meeting with Finance Minister Nicola Willis on Tuesday, July 22, he acknowledged the pressure on households but said the price surge reflected global trends and was largely out of the company's control. Explore courses from Top Institutes in Please select course: Select a Course Category Cybersecurity PGDM Data Science Data Analytics Management Design Thinking healthcare Data Science Digital Marketing Operations Management Others Finance MBA Leadership Product Management Healthcare Public Policy Project Management Technology Artificial Intelligence CXO Degree MCA others Skills you'll gain: Duration: 10 Months MIT xPRO CERT-MIT xPRO PGC in Cybersecurity Starts on undefined Get Details Hurrell explained that the international market influences about 80 percent of the retail price of a block of butter. With strong demand from countries like China and others, prices for dairy fats and proteins have climbed to their highest level in more than five years. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Hanoi: Unsold Furniture Liquidation 2024 (Prices May Surprise You) Unsold Furniture | Search Ads Learn More Undo Fonterra exports 95 per cent of its dairy products, selling them to both domestic and international customers at largely the same price. Hurrell ruled out creating a two-tier pricing system that would offer local consumers discounts. Live Events 'We're not going to play the game of discounting here in New Zealand,' he said. 'Our responsibility is to support the 8500 family farms that make up our co-operative.' He added that higher dairy prices were ultimately a 'good news story' for New Zealand's economy and aligned with government goals for economic recovery. Why do butter costs remain high, and will they come down? The global butter price is set by supply and demand worldwide, similar to commodities like coffee. Due to its heavy reliance on dairy exports, domestic demand has little influence in New Zealand. Fonterra said selling butter for less domestically would mean operating at a loss or providing subsidies, which it views as unsustainable, especially when competing in international markets. Unless there's a shift in global supply or demand, New Zealanders may have to continue paying more for this kitchen staple. Supermarkets respond Supermarkets say they are also feeling the pressure from global prices. Woolworths New Zealand said it was "working hard to keep butter prices as low as possible, for as long as possible," but acknowledged that rising wholesale prices are forcing it to adjust shelf prices. Foodstuffs North Island, which operates PAK'nSAVE and New World, cited an analysis showing that its butter was the most affordable among major North Island retailers in May, at $8.29 for a 500-g block. Price comparisons and cost breakdown Fonterra said comparisons with overseas supermarket prices can be misleading due to differences in currency, product size, and tax. For example, while Australia has no GST on butter, New Zealand includes GST in its retail price. Of the $8.60 price tag for a 500g block of butter in New Zealand, around 80 per cent goes toward global pricing, production, packaging, distribution, and retailer margins. The remainder includes domestic supply chain costs and taxes.
Otago Daily Times
2 days ago
- Business
- Otago Daily Times
Fonterra rules out discounted butter for Kiwis
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".
Otago Daily Times
2 days ago
- Business
- Otago Daily Times
Nicola Willis: NZers not getting a 'raw deal' on butter
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."
The Spinoff
2 days ago
- Business
- The Spinoff
What did Nicola Willis's cost-of-butter meeting with Fonterra actually achieve?
The butter price crisis prompted a high-profile meeting at the Beehive – but global markets, not politicians, are still calling the shots, writes Catherine McGregor in today's extract from The Bulletin. Was the butter meeting a damp squib? Finance minister Nicola Willis says she was surprised by 'the almost breathless excitement' around her Tuesday evening meeting with Fonterra chief executive Miles Hurrell, reflecting a week of coverage perhaps more suited to a major sporting event than a wonky meeting about dairy economics. The Post dubbed it 'the butter meeting heard round the country' while news sites ran red breaking news banners as Hurrell and Willis sat down to talk. With 500g blocks of butter topping $11 in some supermarkets, the stakes, at least symbolically, were high. Willis said the conversation covered many topics, but she did ask Hurrell to clarify how butter is priced and why New Zealanders often pay more than overseas consumers. The main outcome, according to the Herald's Thomas Coughlan? A suggestion that Hurrell will publicly explain the breakdown of butter pricing later this week. 'He was so good at communicating about [butter prices], I have encouraged him to provide that information to New Zealanders,' Willis said. Labour smells spin The political optics of the meeting have raised eyebrows, particularly given Willis's own six-year stint in senior roles at Fonterra, reports Bridie Witton in Stuff. Labour's finance spokesperson Barbara Edmonds questioned whether the meeting was more about performance than policy, arguing Willis should already understand how butter is priced. Willis pushed back, saying she worked in government relations and environmental strategy – not pricing – and refused to 'pre-judge' Fonterra's explanations. Her office also noted she meets with the dairy giant regularly, and the discussion this week wasn't solely about butter. Still, the intense buildup and media framing gave the impression of a high-level intervention, when in fact the levers to influence pricing remain limited. 'The lesson here is that performance politics doesn't work,' Newstalk ZB's Heather du Plessis-Allan said. 'In fact … it runs the risk of backfiring, which is exactly what's happening here.' So why is butter so expensive? As Blayne Slabbert explains in The Press (paywalled), 95% of our dairy products are exported and domestic prices reflect what those products earn overseas – a model known as export parity pricing. Recent Stats NZ data shows butter prices, driven by the global market, have surged 46.5% in a year, reaching an average of $8.60 per 500g. While world dairy prices dipped slightly in July, they remain far above historical levels. Global supply is tight, and demand – especially in China and Southeast Asia – continues to climb. 'You get to the situation we're in now where butter is at extraordinary heights and everyone wants their butter on toast,' High Ground Dairy consultant Stu Davison tells Newstalk ZB's Michael Sergel. 'We don't see it running right back to where we were five years ago.' That international appetite for grass-fed butter benefits our farmers and boosts export revenues, but leaves local consumers squeezed at the checkout. A changing role for Fonterra As butter becomes a lightning rod for public frustration at the cost of groceries, Fonterra may soon exit the retail fray altogether. The co-operative plans to sell off consumer-facing brands like Anchor and Mainland, focusing instead on its business-to-business operations. Writing in The Conversation, agribusiness professors Alan Renwick and David Dean say the move makes commercial sense. While some fear an overseas owner could lead to higher prices for consumers, they think it could help disrupt the current 'cosy' relationship between Fonterra and the supermarkets – potentially even bringing prices down. In the Herald, Clive Elliott, a barrister specialising in intellectual property, argues that the sell-off is a strategic error. 'Our prosperity and ability to remain a first-world economy depends on our ability to add value,' Elliott warns, arguing Fonterra is abandoning decades of brand equity. Regardless of who ends up owning the dairy brands, the butter pricing system is unlikely to shift dramatically. For now, New Zealanders will have to settle for an unsatisfying explanation rather than meaningfully lower costs.
1News
2 days ago
- Business
- 1News
NZers are not getting a 'raw deal' on butter, says Nicola Willis
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 with 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. Finance Minister Nicola Willis says the price of butter will be discussed at her meeting with the giant co-op. (Source: 1News) Characterising the meeting as "constructive and engaging," Willis said Hurrell was candid about the way butter was priced in New Zealand. ADVERTISEMENT Her summary 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 underway to address that." ADVERTISEMENT Fonterra had also observed the supermarket competition. Finance Minister Nicola Willis does not believe New Zealanders are getting a "raw deal" on butter. (Source: "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. ADVERTISEMENT 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."
