Latest news with #MilesHurrell
RNZ News
16 hours ago
- Business
- RNZ News
Fonterra boss meets with politicians over high butter prices
Fonterra's boss has given media the silent treatment over the sky high price of butter. Both National and Labour's finance spokespeople met with Fonterra's chief executive Miles Hurrell last night, trying to find out why the cost of a block is so steep. But whether the debate leads to a price correction or just more froth and churn from lawmakers is yet to be seen. Russell Palmer reports.
NZ Herald
a day ago
- Business
- NZ Herald
Deputy Prime Minister David Seymour defends high butter prices, highlights benefits for farmers
'There are two ways you can look at this. One is to criticise the fact that, you know, prices are high, they're set overseas, and they benefit New Zealand farmers. 'Or we can ask ourselves, how do we ensure that New Zealand has a growing economy, a high-wage economy, so that when prices spike like this it doesn't have a big impact on families.' He claimed petrol prices were low at the moment, and those were high when dairy was cheap so the consistent theme was that 'need for a high wage economy'. Yesterday, Finance Minister Nicola Willis met with Fonterra chief executive Miles Hurrell to discuss the high prices, though Seymour said the meeting was not unusual. 'I think people have misrepresented the whole purpose of the meeting'. Willis told Bridge yesterday morning the meeting would not solely be about butter, but the high price paid by New Zealanders for the dairy product would be on the agenda. 'I will be asking about their retail pricing model, how they're seeing the supermarkets' margins, how they're seeing their own margins, understanding what's getting through to the consumer and whether there's anything we can do there.' In May, Fonterra posted a $1.158 billion Q3 profit and pitched its farmgate milk price forecast for the 2025/26 season in a range of $8-$11 per kg of milk solids. Inflation figures released yesterday show the consumer price index (CPI) increased 2.7% in the 12 months to the June 2025 quarter. That means the official inflation rate is at its highest point in the last year. Green Party co-leader Chloe Swarbrick said there needed to be greater urgency when breaking up the supermarket duopoly. 'That looks, of course, like greater transparency around particularly supply chains. And there's been a lot of words on it, but not a heck of a lot of action.'
1News
a day ago
- Business
- 1News
Fonterra boss quizzed as concern over price of butter spreads
The cost of butter was front and centre at Parliament today as the head of Fonterra faced questions over the soaring cost of dairy. Fonterra chief executive Miles Hurrell had several meetings with various political parties on Tuesday, including National, ACT, and Labour. It included a sit-down conversation with Finance Minister Nicola Willis who was keen to probe the dairy boss about the cost of butter to consumers. The price of butter has skyrocketed by more than 60% in the last year, currently sitting between $8 and $11 for a 500g block. 1News Political Editor Maiki Sherman grilled the Fonterra chief executive, who earns just under $6 million a year in salary, as he exited one of his meetings at Parliament. ADVERTISEMENT Having asked to stop and talk for an interview, Hurrell replied he was on his way to another meeting. Asked what he would say to New Zealanders who thought butter prices were too high, he said: 'Let me talk to Minister Willis today, later this afternoon." He was then asked whether $8 for a block of butter was too much. "Let me talk to Minister Willis," Hurrell reiterated. The issue has raised eyebrows amongst the public who have been dismayed at the cost of butter in local supermarkets. One man in Auckland told 1News, 'You see everything is going up, look at the butter prices and everywhere.' Another woman said, 'Oh my God, butter, it's like double what it used to be.' Another consumer asked what was behind the increase. ADVERTISEMENT 'Butter, all the basics, why does it have to cost this much in New Zealand?' The issue also sparked a sharp interaction in Parliament's debating chamber today between the two major party leaders, Labour and National. 'How many blocks of butter can he buy for the $60 a week he claims to spend on groceries?' Opposition leader Chris Hipkins asked Prime Minister Christopher Luxon. "Well, it's a smart-arse answer isn't it? Ah, question," Luxon replied. The Finance Minister said the public wanted answers from the Fonterra boss. 'Well I think that Miles Hurrell has the opportunity to talk through what goes into the price of a block of butter and it's in his interests to do so," Willis said. But whether Willis could influence dairy prices in any meaningful way was also up for question. The Finance Minister previously worked as a manager at Fonterra before becoming an MP. ADVERTISEMENT 'As a Government, we recognise there are complex drivers behind that. We have to address a number of things, the overall inflation rate; competition between our supermarkets; the costs that go into a block of butter,' she said. Fonterra said the prices for its products were determined by the global dairy market, which was at a five-year high. However, the Finance Minister said she wanted to know more about the margins both Fonterra and supermarkets added on top in order to reach the end shelf price. "I'm interested in Fonterra's perspective about what the supermarket margins look like in New Zealand compared with say Australia or other countries," she said. When asked by 1News, what sort of margins Fonterra was asking for when it came to the price of butter, the chief executive refused to say. 'Let me talk to the minister this afternoon,' he continued. He did agree, however, that it was a big issue to Kiwi across the country at the moment. ADVERTISEMENT 'Yeah, of course it is,' he said.
Scoop
18-06-2025
- Business
- Scoop
Should Kiwis Pay The High Price For NZ Dairy That Overseas Buyers Will?
New Zealanders are paying high prices for milk, butter and cheese because of what people are willing to pay offshore, Fonterra's boss says - but is that fair? The most recent food price data showed milk prices were up 15.1 percent annually last month, to $4.57 per two litres, butter was up 51.2 percent annually to $8.42 per 500g and cheese was up 30.1 percent to $13.04 per kilogram. In May, Fonterra chief executive Miles Hurrell told RNZ prices were driven by global demand. "We're a collection of 8500 small farmers and our job is to deliver for each of them," Hurrell said. "The international market is pushing these prices very high at the moment and our job is to reflect that in the returns that we give back to our farmer owners." University of Auckland economics professor Robert MacCulloch said it was a surprising comment. "It raised my eyebrows. For a CEO to talk that way, I thought for want of a better word was dumb. "He's laying down what's known as the law of one price, or purchasing power parity. Similar goods are expected to be priced the same around the world. "He's saying that applies to dairy and we can sell it anywhere in the world so when the world price goes up, Kiwis pay more and that's the end of the story. "This is a nice theory, but it's not always true in practice. A lot of goods and services do sell for different prices [in different countries]. "He's saying we don't have any sense of social responsibility at Fonterra, which I thought was ill-judged - even though we're using farm land in the country and we've got the emissions and everything, we're ruthless profit maximisers, all we care about is maximising returns." He said BMW offered cheaper vehicles to Germans and a similar model could be used for dairy products in New Zealand. Child Poverty Action Group spokesperson Isaac Gunson said Finance Minister Nicola Wilis had referred in speeches to the fact that New Zealand fed 40 million people "with levels of efficiency and sustainability that are the envy of many". "At the same time, more than a quarter of our children experienced food insecurity in the year ended June 2024. While we feed the world, our child poverty rates are lagging behind many other countries, especially in Europe. "When milk powder sells high in Shanghai or Brussels, whānau in Aotearoa pay more for their Weet-Bix and milk - despite the fact we can grow all of the ingredients right here, and get them where they need to go.... It's a system that rewards exporters, but punishes households already doing it tough. "In a world worried about food security, it is New Zealand children who bear the brunt of that worry - and who are literally paying for it." But Gareth Kiernan, chief forecaster at Infometrics, said there were only two ways that goods could be sold for a lower price domestically than internationally: By regulating the price or paying subsidies to farmers to make up the difference. "On its own, this regulation would result in farmers making less product available to the domestic market, potentially leading to shortages. Therefore it is likely that the government would need to also mandate a minimum percentage of product to be sold domestically. "However, the lower overall return to farmers would be likely to lead to reduced production levels because squeezing out that last drop of milk would not be as profitable." He said it would also lead to lower GDP and lower incomes per capita for the country as a whole. Subsidies to farmers would need to be paid for somehow, so more tax would have to be collected. "If the revenue came from taxing higher-income households, then it is likely that some lower-income households would be better off, but higher-income households would be worse off despite their milk and butter being cheaper. "With any tax/welfare policy, there is some deadweight loss from the policy due to the administrative costs of government, as well as the less efficient allocation of resources. In this case, the less efficient allocation of resources comes from the consumer side, where people spend more than would be sensible on dairy products because they don't face the full costs." He compared it to metered or unmetered water. "If water is metered and people have to pay for their usage, then they will use it more carefully and efficiently, reducing demand and production costs. It means that local councils can then use some of the resources they would have needed to provide water to provide other goods and services instead. In the case of farmers with domestic subsidies, demand for their product would be overinflated, leading to too much of the economy's resources being devoted to farming, when there would be other more productive uses if people faced the full cost of their dairy products and therefore demanded less. Again, the outcome is lower GDP and lower incomes per capita for the country as a whole." He said there had been "egregious" examples of subsidisation in petrol prices in the Middle East. Iran, which sells petrol at about US36c a litre, had been dealing with fuel smuggling problems as people tried to get petrol out to neighbouring countries with more expensive prices. "The difficulty with these arguments is that people see the direct cost or benefit to them in terms of dairy prices, but they don't see the indirect costs of higher taxes and/or lower GDP per capita because the transmission paths are so long and opaque." Murat Ungor, a senior lecturer in the University of Otago department of economics, agreed if New Zealand detached itself from international pricing, it would undermine the incentive to efficiently produce and export and affect farmer incomes. "Typically, US butter comprises 80 percent butterfat, while European and New Zealand products offer a higher 82 percent content. This variance not only influences pricing structures but also shapes trade opportunities. European and Kiwi butter, with their richer content, cater more readily to international markets demanding premium quality. "Domestic consumers compete with international buyers, meaning local prices are influenced by global market rates rather than just local production costs. NZ dairy processors sell at international market rates, leaving little incentive to discount locally. Fonterra's dominance and supermarket duopoly reduce pressure to lower retail prices."
Otago Daily Times
17-06-2025
- Business
- Otago Daily Times
Should Kiwis be paying so much for butter?
By Susan Edmunds of RNZ New Zealanders are paying high prices for milk, butter and cheese because of what people are willing to pay offshore, Fonterra's boss says - but is that fair? Restaurants on a slippery slope due to dairy prices (Subscriber) The most recent food price data showed milk prices were up 15.1 percent annually last month, to $4.57 per two litres, butter was up 51.2 percent annually to $8.42 per 500g and cheese was up 30.1 percent to $13.04 per kilogram. In May, Fonterra chief executive Miles Hurrell told RNZ prices were driven by global demand. "We're a collection of 8500 small farmers and our job is to deliver for each of them," Hurrell said. "The international market is pushing these prices very high at the moment and our job is to reflect that in the returns that we give back to our farmer owners." University of Auckland economics professor Robert MacCulloch said it was a surprising comment. "It raised my eyebrows. For a CEO to talk that way, I thought for want of a better word was dumb. "He's laying down what's known as the law of one price, or purchasing power parity. Similar goods are expected to be priced the same around the world. "He's saying that applies to dairy and we can sell it anywhere in the world so when the world price goes up, Kiwis pay more and that's the end of the story. "This is a nice theory, but it's not always true in practice. A lot of goods and services do sell for different prices [in different countries]. "He's saying we don't have any sense of social responsibility at Fonterra, which I thought was ill-judged - even though we're using farm land in the country and we've got the emissions and everything, we're ruthless profit maximisers, all we care about is maximising returns." He said BMW offered cheaper vehicles to Germans and a similar model could be used for dairy products in New Zealand. Child Poverty Action Group spokesperson Isaac Gunson said Finance Minister Nicola Wilis had referred in speeches to the fact that New Zealand fed 40 million people "with levels of efficiency and sustainability that are the envy of many". "At the same time, more than a quarter of our children experienced food insecurity in the year ended June 2024. While we feed the world, our child poverty rates are lagging behind many other countries, especially in Europe. "When milk powder sells high in Shanghai or Brussels, whānau in Aotearoa pay more for their Weet-Bix and milk - despite the fact we can grow all of the ingredients right here, and get them where they need to go.... It's a system that rewards exporters, but punishes households already doing it tough. "In a world worried about food security, it is New Zealand children who bear the brunt of that worry - and who are literally paying for it." But Gareth Kiernan, chief forecaster at Infometrics, said there were only two ways that goods could be sold for a lower price domestically than internationally: By regulating the price or paying subsidies to farmers to make up the difference. "On its own, this regulation would result in farmers making less product available to the domestic market, potentially leading to shortages. Therefore it is likely that the government would need to also mandate a minimum percentage of product to be sold domestically. "However, the lower overall return to farmers would be likely to lead to reduced production levels because squeezing out that last drop of milk would not be as profitable." He said it would also lead to lower GDP and lower incomes per capita for the country as a whole. Subsidies to farmers would need to be paid for somehow, so more tax would have to be collected. "If the revenue came from taxing higher-income households, then it is likely that some lower-income households would be better off, but higher-income households would be worse off despite their milk and butter being cheaper. "With any tax/welfare policy, there is some deadweight loss from the policy due to the administrative costs of government, as well as the less efficient allocation of resources. In this case, the less efficient allocation of resources comes from the consumer side, where people spend more than would be sensible on dairy products because they don't face the full costs." He compared it to metered or unmetered water. "If water is metered and people have to pay for their usage, then they will use it more carefully and efficiently, reducing demand and production costs. It means that local councils can then use some of the resources they would have needed to provide water to provide other goods and services instead. In the case of farmers with domestic subsidies, demand for their product would be overinflated, leading to too much of the economy's resources being devoted to farming, when there would be other more productive uses if people faced the full cost of their dairy products and therefore demanded less. Again, the outcome is lower GDP and lower incomes per capita for the country as a whole." He said there had been "egregious" examples of subsidisation in petrol prices in the Middle East. Iran, which sells petrol at about US36c a litre, had been dealing with fuel smuggling problems as people tried to get petrol out to neighbouring countries with more expensive prices. "The difficulty with these arguments is that people see the direct cost or benefit to them in terms of dairy prices, but they don't see the indirect costs of higher taxes and/or lower GDP per capita because the transmission paths are so long and opaque." Murat Ungor, a senior lecturer in the University of Otago department of economics, agreed if New Zealand detached itself from international pricing, it would undermine the incentive to efficiently produce and export and affect farmer incomes. "Typically, US butter comprises 80 percent butterfat, while European and New Zealand products offer a higher 82 percent content. This variance not only influences pricing structures but also shapes trade opportunities. European and Kiwi butter, with their richer content, cater more readily to international markets demanding premium quality. "Domestic consumers compete with international buyers, meaning local prices are influenced by global market rates rather than just local production costs. NZ dairy processors sell at international market rates, leaving little incentive to discount locally. Fonterra's dominance and supermarket duopoly reduce pressure to lower retail prices."
