Milk pricing probe

[Spoon1]

Kinda belongs in here I guess.

I'm surprised noone has commented on the Commerce Commission findings yet. It doesn't surprise me that they basically wasted their time and I don't expect much to change under a National led government either, no matter what PR friendly crap Key spouts. Blah blah National and farmers blah blah.

It's obvious to everyone that we're being fucked without lube by Fonterra under the guise of "international price increases". Someone just needs to actually step in and do something about it.

Fonterra - I'm lovin' it

[CCS]

I'm all for a milk spicing probe.

[Charismo']

they're called market rates... why should NZers pay less for milk than the rest of the world are willing to pay?

[xor]

I buy milk powder which works out to about $1 a litre. Can't say it's expensive eh.

[StN]

Originally Posted by Charismo'

they're called market rates... why should NZers pay less for milk than the rest of the world are willing to pay?

Because they see Arabs paying $0.20l for petrol and can't see a difference.

I'm confused as to what the differences in milk are. I've heard conflicting stories about Blue top being full on normal milk, but that green and some cheaper brands are reconstituted powdered milk. Any ideas?

[leadinjector]

lol at the fonterra guy on the news the other day blaming the shops for the prices, saying that the shops want the farmers to sell it for a lower price.

they arnt BUYING it from the farmers you fuck, theyre buying it from fonterra. you know, that company that makes fucking huge profit every year? yeah, you guys. so fuck off.

[cEvin]

Originally Posted by StN

I'm confused as to what the differences in milk are. I've heard conflicting stories about Blue top being full on normal milk, but that green and some cheaper brands are reconstituted powdered milk. Any ideas?

There's no way blue top is 'normal' milk. Silver top is probably the closest without going to the organic/farm brands. Btw you can buy unpasteurised/homogenised milk, but only as a beauty product.

I think all (popular brand) milk has the cream removed and is homogenised, I imagine it all comes from the same batch. The cream/fat would then be fed back in depending on the required product.

Green/yellow and lower fat milks are more expensive than fattier blue/light blue, even though they essentially have a higher water content :/

[fixed_truth]

Key:

"My view is that it is quite tough on New Zealanders who rely on milk. It's a very staple part of our diet and I acknowledge that New Zealanders are struggling under milk prices.

"On the other side of the coin, is it a bad thing for New Zealand that milk prices are high? Well, for the overall good of the country's export earnings, it's actually a positive thing that commodity prices are high."

http://www.stuff.co.nz/the-press/new...-price-inquiry

The report, commissioned by Fonterra and DairyNZ, shows that dairy farming provides 26 per cent of New Zealand's exports; a $1 rise in Fonterra's payout makes every New Zealander nearly $300 better off; dairy farmers spent about 50c in every dollar they received on locally produced goods and services; every tonne of dairy exports helps reduce the current account deficit, bringing down interest rates and reducing mortgage payments for homeowners; dairying employs 35,000 workers directly and another 10,000 contractors.

http://www.bayofplentytimes.co.nz/ru...ryone/3933905/

The question I would like to know is would NZ'ers real incomes be negatively effected if Fonterra lowered domestic milk prices?

[[WanG] Wandarah]

Originally Posted by Charismo'

they're called market rates... why should NZers pay less for milk than the rest of the world are willing to pay?

Really?

[doppelgänger of someone]

There was a report quoting the price on 1L anchor blue top milk to be about $3.5... OH NO EYE GOUGING PRICE BLAME FONTERRA... in a petrol station. EVERYBODY KNOWS petrol stations specialize in highway robbery when it comes to milk and bread. Meanwhile, last time I checked it costs $2.6 in the supermarket. It is not cheap, but I can live with it.

Food price in general has been rising sharply throughout the world lately. I don't see how this is just a NZ or Fonterra problem, except maybe media/politicians making an issue out of it. Especially when Commerce Commission decided that they got more important things to investigate.

[crocos]

IMO a lot of the fuss is simply in order to sell newspapers.

[Charismo']

Originally Posted by leadinjector

lol at the fonterra guy on the news the other day blaming the shops for the prices, saying that the shops want the farmers to sell it for a lower price.

they arnt BUYING it from the farmers you fuck, theyre buying it from fonterra. you know, that company that makes fucking huge profit every year? yeah, you guys. so fuck off.

lol yes.. because you know, HOW DARE THEY make a profit...

[Lightspeed]

Originally Posted by cEvin

There's no way blue top is 'normal' milk. Silver top is probably the closest without going to the organic/farm brands. Btw you can buy unpasteurised/homogenised milk, but only as a beauty product.

I think all (popular brand) milk has the cream removed and is homogenised, I imagine it all comes from the same batch. The cream/fat would then be fed back in depending on the required product.

Green/yellow and lower fat milks are more expensive than fattier blue/light blue, even though they essentially have a higher water content :/

Interesting...

[Dazza]

oh well at least when all the worldwide transport taxes come in the price of milk will drop

[CCS]

I fully support a bilk splicing probe.

[PhX]

Originally Posted by Lightspeed

Interesting...

Yup, most people dont believe yoou when you tell em but hell ive only been into a few dairy factories and they havent so they must be right.

People get so pissy about this, im sure the dad of the family still goes off to the pub to spend $8 on a glass of beer. Price of milk is the least thing to worry about, its the cheapest for of protein isnt it? or one of the cheapest i guess.

[Gerbs]

Petrol is cheaper than milk. Thats just fucked up.

[Spoon1]

Originally Posted by Charismo'

they're called market rates... why should NZers pay less for milk than the rest of the world are willing to pay?

Why sell us any at all then? Why not just sell it all overseas. Fuck NZ right?

...

Does it even need to be said?

[Ab]

Originally Posted by Gerbs

Petrol is cheaper than milk. Thats just fucked up.

Petrol is cheaper than water, and water falls from the sky.

[CCS]

Yeah I'd like an ilk ricing strobe.

[cEvin]

Milk is cheaper than liquid gold, why is THAT?

[BloodDonor]

my question is they say milk price is set by international prices


surely with the NZD gaining and gaining on the USD, the price Fonterra gets paid is worth less and less?

[A Corpse]

Originally Posted by BloodDonor

my question is they say milk price is set by international prices


surely with the NZD gaining and gaining on the USD, the price Fonterra gets paid is worth less and less?

That's why they have to charge NZers more, to make up for their falling overseas profits.

And then when the dollar weakens, they have to charge NZers more because they can sell it for more overseas.

[chiquelet]

Originally Posted by doppelgänger of someone

EVERYBODY KNOWS petrol stations specialize in highway robbery when it comes to milk and bread.

Where I live at least, it's cheaper to buy 2x2l bottles of milk from BP than it is from any supermarket. I currently pay $6.70, which is less than it was a few weeks ago. The Warehouse also has a 2x2l deal, slightly cheaper than BP iirc.

I bought milk from Countdown the other week, and the cheapest 2L was $3.70.

[crocos]

Dairy Dale, huh?

[CCS]

I'm all for a filk nicing robe.

[Golden Teapot]

Isn't the price just some point near the efficient frontier of a price elasticity of demand model? NZers have themselves to blame by acting to demonstrate inelastic demand as the price was increased.

Sure some people can't afford the quantity of milk they want any more but that's tough luck really. They can still use milk powder though and get very close to the same nutritional benefit for a far lower spend.

[Spoon1]

An orchardist walks from his gate to a tree, picks off an apple and brings it to you. Would you expect to pay the same price as someone in the UK, where the apple has gone through many more hands and miles to get there?

It's about decency and fairness. Perhaps you need less money GT - might help you comprehend the situation better?

[Charismo']

Originally Posted by Spoon1

Why sell us any at all then? Why not just sell it all overseas. Fuck NZ right?

...

Does it even need to be said?

Err, what?

they can and do sell here for the same price as they get from the global market.

Just so you are aware, Fonterra is basically the most successful milk product exporter in the world, MAINLY because most other countries in the world still practice extremely protectionist policies for their farming industries.

And you know what that results in? Small, inefficient farms that are unable to produce enough for their local populations, or, too many farms that produce too much for their location populations.

But guess what? If they don't produce enough, they have to buy from an external country. But they're not supposed to do that because their farming industry is protected. So prices either go up domestically or there just isn't enough. And if they produce too much, well other countries with protectionism don't want to allow that produce into their markets either. Ending in food dumping and other wasteful practices.

I'm not really sure what *you* think the real solution should be. Do you think that milk production should be state owned and operated perhaps so that NZers can have their cheap milk? Rob Peter to pay Paul? Do you think the farmers should have their profit regulated?

Welcome to 1970s china my friends.

[cyc]

Originally Posted by Spoon1

It's about decency and fairness. Perhaps you need less money GT - might help you comprehend the situation better?

Decency and fairness in whose books? This "MILK IS TOO EXPENSIVE IN MY SUBJECTIVE OPINION AND THEREFORE WE SHOULD REGULATE THINGS!" business doesn't strike me as very decent and fair. There's another debate that's brewing, which is the claim by some farmers/smaller collectives that don't belong to Fonterra that Fonterra is using its market power to deter competition. If that's true, that's certainly something worth looking into. But people who want to use the Commerce Commission to just bully people into supplying things at perceived "fair" prices can fuck right off.

[Spoon1]

Originally Posted by Charismo'

Err, what?

they can and do sell here for the same price as they get from the global market.

No shit but guess what? We're the LOCAL market, not the (rest of the) global market.

You know why people get shitted off at regional pricing for Steam games? It's because they're downloading them from the same place as every other fucker. There are no transport/distribution costs involved so why the fuck should we pay more than someone in the US? Ship it in a box via multiple companies to the other side of the globe and you don't mind paying more for the privilege.

It's kinda like that but in reverse.

[Golden Teapot]

Originally Posted by Spoon1

It's about decency and fairness.

That's a romantic view of retail that simply does not mirror what happens in the real world.

Consumers are those the ultimately set the selling price of an item like this. There are entirely adequate and much cheaper substitutes available - there's no notion of "must have" here.

[Vrtigo]

youve got a fucking strange view of the world mate.

[Golden Teapot]

Perhaps you've a very uneducated view of the world instead? I'm claiming only the contemporary view of economics as taught in a fifth-form economics class. This is ultra basic stuff really.

[zeekiorage]

Originally Posted by cyc

There's another debate that's brewing, which is the claim by some farmers/smaller collectives that don't belong to Fonterra that Fonterra is using its market power to deter competition. If that's true, that's certainly something worth looking into.

This is what I'm more concerned about with the dairy industry. I would say CC looking into situations like Telecom/Vodafone duopoly, which resulted in much better pricing and choice for customers, is a good thing.

[Golden Teapot]

Originally Posted by Spoon1

There are no transport/distribution costs involved so why the fuck should we pay more than someone in the US?

Because prices for most retailers / wholesalers are not set as the cost of manufacture plus a fixed profit loading. Instead prices are set to maximise profit. This generally means playing off higher prices versus few customers until a sweet spot is found.

Many people in New Zealand see value in paying sky high prices for things witnessed by the fact that so many do pay.

People like me don't see the same value and we simply import from another market. You'll have noticed I imagine that in this last week that retailers of rugby jerseys would like to punish people like me who import things.

I was looking at an item recently that I could buy from Harvey Norman for $1600 or that I could buy from Amazon delivered in three days with GST paid for $600. Guess which option I chose? Plenty of NZers chose the former option and perpetuate the insane arguments that some retailers put forward to justify their prices. The truth of the matter is that prices are high because people are willing to pay high prices.

Like it or not the price of milk is what it is because enough people keep buying it at this price. It's no more complicated than this.

[MadMax]

i'm not so sure i buy into that reasoning. it might apply to some goods, but not so much for a commodity like milk. look at petrol for example. how high could it go before people stop buying it for personal use?

i don't see people stopping their milk consumption with even an increase of a few dollars a bottle. eg cereal is the easiest, cheapest, quickest way of getting in a nutritious minute meal before the rush to work or school. how many people do you see drinking black tea or coffee or not providing that option to guests/staff.


... and why on earth do some people pay almost double the cost for exactly the same milk with a different package?

[Golden Teapot]

Originally Posted by MadMax

i'm not so sure i buy into that reasoning.

There are very close substitutes e.g. powdered milk. Go to an Asian supermarket and you'll find non-NZ sourced products in various forms. There are non-dairy whiteners for hot drinks too.

Very few people have to have milk. Many people choose to have milk and thus they choose to pay what is asked for it.

[Vrtigo]

Originally Posted by Golden Teapot

Perhaps you've a very uneducated view of the world instead? I'm claiming only the contemporary view of economics as taught in a fifth-form economics class. This is ultra basic stuff really.

im aware of the economic factors. what im saying is that you have a very closed-minded view of things.

[MadMax]

Originally Posted by Golden Teapot

e.g. powdered milk.

i'm guessing you've never tried that crap. It should never be consumed outside of emergencies or camping ... it's plain yuck. Plus it voids the whole point of the lazy prep-free cereal generation

And have you seen the price of baby formula? It's $20 to $30 a can that doesnt last a week per child