Watchdog mulls milk price inquiry

Photo / Paul Estcourt

The Commerce Commission is investigating whether it needs to carry out a full-blown probe of the retail prices charged for milk.

Last week, commission chairman Mark Berry told Parliament's commerce select committee that it would not hold an inquiry into milk prices, but would hear arguments.

"At this time we see no reasonable circumstances to commence a price control inquiry into the price of milk," Dr Berry told MPs.

A spokeswoman for the commission said today that when Dr Berry was giving evidence, the commission did not expect to hold an inquiry. It still did not expect to hold an inquiry, but was now formally investigating whether there was a need for one.

The commission said today "a number of parties" had laid specific complaints about the retail price of milk and were calling for the commission to hold a price control inquiry.

If it goes ahead, the inquiry will be the first price control one since the commission analysed gas pipelines services in 2003 - at the request of the then Energy Minister - and recommended regulatory control of gas pipeline services.

The only other previous price control inquiry was in 2002, when it looked into airport charges in Auckland, Wellington and Christchurch, but its recommendation for regulation was not taken up by the Government.

As part of its review, the commission said it would look at the supply of milk to milk product processors, the manufacture and supply of milk products, and the retailing of milk products.

"The Commission intends to review the operation of each of these levels and consider whether it should hold a price control inquiry," said Commerce Commission chair Dr Mark Berry.

According to Dr Berry, the campaign for an inquiry has been pushed by a lobby, Consumer New Zealand, which formed a coalition with other groups, including the Federation of Family Budgeting Services, the Salvation Army, Barnardos, Manaia Health PHO, Child Poverty Action Group, Presbyterian Support and Grey Power.

These groups said 91 per cent of New Zealanders thought they were paying a high price for milk compared with other supermarket staples and 79 percent agreed there should be a government inquiry into milk pricing.

Consumer NZ chief executive Sue Chetwin said there was a concern that New Zealanders might be paying prices higher than those NZ milk fetched overseas because of a lack of competition to Fonterra. The only other major competitor in the local market is Goodman Fielder, which has to buy its milk from Fonterra.

Fonterra collects more than 90 per cent of the milk produced in New Zealand.

A Consumer NZ survey of 1000 New Zealanders commissioned earlier this month found 91 per cent thought they were paying a high price for milk compared with other supermarket staples.

- NZPA, NZ HERALD ONLINE