KEY POINTS:
Farmers get only the equivalent of a tiny slice of cheese for each block they sell, Federated Farmers says.
The farming lobby group yesterday released a report showing that producers of staples, such as meat and cheese, are receiving a marginally smaller share of returns than four years ago.
"This report clearly shows that food producers are certainly not creaming it," president Charlie Pedersen said. The report highlighted that the cause of high food prices was complex and outside the control of local food producers, he said.
"Transport, processing, energy and marketing, plus normal margins, are some of the factors which have pushed prices up."
The report, compiled for Federated Farmers by the New Zealand Institute of Economic Research, said producers of meat, dairy, grains, fruit and vegetables received an average of about a quarter of the price that their produce sold for in shops. Their share of the total "consumer food basket", made up of those staples, had decreased slightly from 20.5 per cent in 2004 to 20.2 per cent this year, the report said.
While their overall share did not really change, milk producers experienced tidy gains, increasing their share of the food basket by 10 per cent to 35.5 per cent in the past four years.
Meanwhile, the price of milk rose by 19 per cent in the year to January, and the price of cheese by 63 per cent.
But the report said surging food prices did not necessarily reflect farmers receiving a greater share of what consumers were paying.
"Higher retail prices for foods may also reflect increasing transport costs [from rising fuel prices] being passed on to consumers."
Sharp increases in international commodity prices had played an important role, with the price of butter, for example, more than doubling since mid-2002.
Prices for milk powder and cheese rose by more than 80 per cent, and the international prices for such commodities largely set the price for the domestic market, the report said.
But Consumer New Zealand said the report failed to paint a complete picture because it did not take into account dairy farmers' record payouts from Fonterra.
"While farmers say the percentage of what they get hasn't changed since 2004, certainly the value of that has changed rather dramatically," chief executive Sue Chetwin said.
She said that from a consumer's point of view, it was important to know how increased costs affected the whole of the food supply chain but it was difficult to get such information.
"New Zealand is a very tiny market and it's dominated by a very small number of big players.
"It's probably in the area of lack of competition that we have most concern."
According to Statistics New Zealand, food prices have increased about 8 per cent in the past two years, while farm expenses rose 4.9 per cent in the year to December.
