In a dramatic about–face, the Commerce Commission has indicated it is considering a full blown investigation into the price of New Zealand milk.
This announcement comes just a week after the commission’s chairman Dr Mark Berry told parliament’s Commerce Select Committee they were not considering an inquiry.
A spokesperson for the commission told a number of media outlets that several unnamed parties had laid specific complaints about retail milk pricing and had called for an inquiry.
One of those supporting an inquiry, Green Party MP Sue Kedgley, says there is a lot of confusion around how the industry is run and how prices are set.
“This is what the inquiry needs to investigate. It could well be that the supermarkets are marking the prices up far too high, the retail end, or it could be at the wholesale end, we don’t know yet.”
Sue Kedgley says so far the private sector has failed to explain why there is a disparity between price at farm gate and on supermarket shelves.
“Fonterra says the price is set by the global market, but when the global market price comes down, milk price doesn’t.
“The explanations don’t really make sense to me, and I think it would benefit from a wholesale inquiry by the commerce commission, which has the statutory powers to carry out an inquiry.”
Farming groups are saying a direct on-shelf price comparison with other countries is misleading, as no two regulatory systems are the same.
Federated Farmers Dairy spokesperson Willy Leferink says any changes to milk price is ultimately up to the government, which already takes a sizeable chunk of the consumer dollar.
“If New Zealanders as a whole want a cheaper milk price, we have to tell the government!
“I think we’re the only country in the world which taxes milk with GST. It’s important we have an affordable food package for all New Zealanders.”
Consumer New Zealand commissioned a survey in early March which showed more than 90 percent of New Zealanders were concerned about the price of milk and almost 80 percent favoured an investigation.
Consumer New Zealand CEO Sue Chetwin says there is the perception in the marketplace that kiwis are getting a raw deal with milk price considering how much dairy we produce.
“I think there is extreme disquiet among New Zealanders around what we are paying for milk.
“We only have Fonterra’s word that we’re paying international prices, we don’t know whether that’s true or not.
“They are very secretive about their pricing, as are the supermarkets. You have small processors saying they can’t really compete, so I think this preliminary investigation will tell us whether there is competition or whether there needs to be some kind of regulation.”
The country’s largest dairy producer, Fonterra, says domestic milk price is set by the same global drivers as the rest of the world, and kiwis simply have to live with it.
Fonterra has said there’s no need for an inquiry, and they’ve already intervened on consumers’ behalf by freezing the domestic milk price until the end of the year.
