Super co-op

New Zealand has always been a country of sheep and cattle. Milk, butter and cheese are the firm bases on which the economy has already been afloat for dozens of years. A couple of years ago the different cooperative associations decided to join forces in a super company: Fonterra. This developed into a kind of monopoly position in the foreign trade of milk products. Milk is picked up at the farms, processed and sold, and each year the farmers get a payment, paid out per kilo of solid milk substances, for instance milk powder.

Last year the pay out was unexpectedly much higher than previous years because of a combination of developments throughout the world such as poor harvests, bio-fuel and economic catastrophes. Suddenly the New Zealand milk products could not keep up with the demand. As a result prices went through the roof.

Record payment

To give an impression of what it is all about: two years ago the price per kilo of milk powder was still $4.67, last year it went up to $6.90 and this year it will go up another dollar. That is an average pay out of almost one million dollar per cattle farmer. Admittedly, there was a long drought which has cost a half to one billion dollars and the production prices have also increased considerably, caused by fuel and fertilizer prices.

Supermarket prices

But why have the prices of milk products doubled in our supermarkets? That question is asked by the bewildered New Zealanders. During last year the price of a litre of milk has increased more than twenty percent, the butter price has almost doubled and cheese went up more than sixty percent, whereas the farmers only received 25 cents more per litre of milk. Fonterra and the supermarkets swear that their profit has stayed the same and the transporters complain bitterly about their losses. Guess, what is happening?

Usury profits?

Why do we pay, we agree with the greens, as much as overseas consumers? Our market only takes four percent of the total sales of Fonterra. We are a regional market which is affected by local fluctuations. Price increases because of drought and increased fuel prices have to be passed on, but those costs are much lower than these exorbitant increases. "We do not ask Fonterra to sell their products to us with a loss. We ask them to make a reasonable profit only". Why would the cattle farmers and their cooperation increase their profit margin unreasonably high and at the expense of their own compatriots? Many New Zealanders would like to get an answer to that question.

A committee will examine if everything has been done correctly. Meanwhile the sighing and moaning kiwis continue to pay their increased supermarket bills. They compensate for the price increases of milk and cheese by buying half of what they used to buy.

Sour

The Dutch version of this article is published in the May/June 2008 edition of Holland Focus.
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