KEY POINTS:
It's not the farmers getting the lion's share of sky rocketing food prices, says Federated Farmers, which is trying to counter public perceptions of farmers "creaming it".
The group has commissioned research looking into what proportion of the cost of common food items ends up in the farmers' pocket and only in honey does it come to more than 40 per cent.
Written by economists at the NZ Institute of Economic Research, (NZIER), the research looks at who are the main beneficiaries from prices paid for bread, milk, butter, cheese, honey, lamb and beef.
"Food producers received an average of about a quarter of the prices that these items sold for in retail outlets," says the report.
The individual farmer shares was:
* Honey - 40.12 per cent
* Milk - 35.46 per cent
* Lamb chops - 30.97 per cent
* Blade steak - 18.86 per cent
* Bread - 16.37 per cent
* Cheese - 5.3per cent
This research comes the same day chairman of dairy giant Fonterra, Henry van der Heyden gave a speech saying that the co-operative was "one of this country's few hopes for tapping a "rich vein" of economic opportunities opening up globally."
Federated Farmers president president Charlie Pederson said the report showed that when it came to a slice of bread, the "food producer" got the equivalent of three slices in a 20 - slice loaf.
"The cause of high food prices is complex and outside the control of the food producer," said Pederson.
"Transport, processing, energy and marketing plus normal margins are some of the factors which have pushed prices up. There is a link to export prices, but this has never changed since New Zealand began exporting meat back in 1882."
There was a misconception that because dairy farmers are receiving good payouts from Fonterra, this was driving up prices, Pedersen said.
"In fact, fertiliser and the cost of compliance have risen. Food producers have had to cope with a severe drought and pay high prices for supplementary feed for their stock.
Many sheep and beef farmers will suffer losses this year adding to the losses of previous years.
"This report clearly shows that food producers are certainly not 'creaming it'. Let's not forget that food producers also have to buy food for their families," said Pedersen.
He said the report provides some "quality information about a complex and emotional issue that is attracting widespread attention in the media.
One of the prime targets for consumer anger is the cost of dairy products rising at the same time Fonterra announces record payouts to farmers.
The other side of this equation was spelled out in a speech given to the Wairarapa Chamber of Commerce by Henry van der Heyden today.
He said major changes in wealth distribution, consumption and the globalisation of food and distribution services were driving consumer demand - particularly for dairy-related health and nutritional products.
"These mega trends are changing the rules of the game. They are also exposing huge opportunities around the world. I believe Fonterra is one of few companies which has the necessary scale, global footprint, credentials and strength to tap this rich vein for New Zealand."
He said Fonterra was a "real backbone of the New Zealand economy", this year putting more than $9 billion into farmers' pockets, employing 10,000 local staff and creating many thousands more jobs and economic activity in the regions and urban centres.
The economic contribution and success of Fonterra today was something to celebrate, with the current record payout from the company injecting around $3.6 billion more into the economy compared with the 2006/07 year.
Van der Heyden said Fonterra would have to evolve to "stay in the game". And, it was inevitable that Fonterra's capital structure would come under pressure with the required capital for growth.
"One thing's for certain, we can't do nothing. If we do nothing, we might as well write off the years of work which went into creating Fonterra and getting us where we are today."
- NZ HERALD
