High butter prices and farmer flow on
I have seen a lot of angst lately around the price of butter in New Zealand supermarkets. People are writing letters to the editor to complain and protest about the record prices charged, with many asserting that because it is made in New Zealand they should be subsidised to reduce the cost. While I don’t visit supermarkets very often, and when I do it’s a very quick detour, I think the cost of food in general is expensive. But I also think that this new pricing is going to be the new normal. With our food producers now being subjected to additional compliance costs around the environment, animal welfare and labour requirements, the costs of producing these essential food category items has increased substantially.
New Zealand is no longer a producer of cheap food and I think the price premium that the everyday consumers pay for these products needs to be reflective of the hard work, research and development and compliance practices that farmers and producers are now implementing. Farmers are required to meet these standards to guarantee export market access to certain countries and continue to earn the lion’s share of the nation’s overseas earnings.
Kiwi consumers need to understand that they will also have to pay similar premiums. Farms and processors are businesses and it doesn’t make economic sense to sell products here at a lower price.
The debate will rage about why it can sometimes be cheaper to buy the likes of French butter or South American beef in New Zealand.
That may be the case, but please understand that these countries substantially subsidise their agricultural industries and there is no guarantee as to what their production standards are. New Zealand’s food safety and security record is second to none in a global context. If you reckon the farmers are creaming it, think again.
The average dairy farmer is still receiving about 30 cents per litre of milk supplied to the processor, and I am guessing this substantially-lower-than-retail price will be much the same across the primary industries.