KEY POINTS:
The price of milk is too high in New Zealand compared to other Western countries, according to an independent politician.
MP Gordon Copeland has released figures showing the price of milk is at least 15 cents higher than Australia, Britain, Canada and the United States.
"The price of
milk should actually be significantly less here than in the countries to which New Zealand exports. Freight and insurance from New Zealand, the tariff payable at the border and internal freight within the importing country all have to be netted back to establish a comparable price in New Zealand," he said.
Mr Copeland said he raised the issue with the Commerce Commission at a select committee last week and was told its main concern was to ensure domestic competition for milk and other dairy products exists within New Zealand.
"Fonterra dominates the New Zealand milk market and in those circumstances it is naive to imagine that the smaller suppliers have a commercial incentive to lower their prices. Kiwi consumers need to be assured someone is looking out for their interests."
Fonterra spokeswoman Hilary Marett said Fonterra could not and did not set retail prices.
"Fonterra has a responsibility to our shareholders to get the best price for their milk. What our customers pay is based on what that milk is worth on the international market."
Foodstuffs managing director Tony Carter said its profit margin has not increased.
"There are two possible explanations; the GST charged in New Zealand which is not charged in Australia or Britain and the timing of when the prices were taken."
Consumers' Institute chief executive Sue Chetwin said the institute was concerned about high dairy prices in general.
"We have just started an investigation of our own into how Fonterra operates."
Results from the investigation were expected to be published next month.
Ms Chetwin said the institute was not looking at an international comparison.
"I don't know whether these (Copeland's) figures are correct of not. If there were high retail margins we'd be worried about that."
Mr Copeland's figures said two litres of milk cost $3.25 in New Zealand compared to $3.10 in Australia (the average for Sydney and Melbourne), $2.94 in Britain (Sainsbury's price), $2.53 in USA, $2.36 in Canada and $3.43 in France.
He said all prices were converted back to New Zealand currency at exchange rates on March 12.
Berl senior economist Ganesh Nana said there were a "whole lot" of issues that could mean "different numbers" for the same product.
These include tax rates, timing, transport and profit margins.
Mr Nana said he did not know the price of milk internationally.
"If his numbers are correct then there would be a question there, but I'd be surprised if they are correct."
- NZPA
