David Russell, CEO of the Consumers Institute, said yesterday [Tuesday] that he has received a “reasonable explanation” as to why the cost of milk in New Zealand is so high.
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Russell told Stuff that he has consulted dairy executives Mainland CEO Geoff Norgate and NZDF CEO Peter McClure in separate meetings on the cost of milk, seeking answers in response to public debate about why the price of milk is increasing while commodity prices are falling.
Both Norgate and McClure told him that consumers are now paying higher prices because the processors have been paying higher prices for the last year or so.
Norgate explained that they had taken a knock because they were paying higher than necessary prices as set by the international market to farmers for 12 months, however they couldn’t back date and ask farmers for money back.
McClure added that this is not just down to commodity prices, but that foreign currency values also impacted on the price of milk.
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By GlobalDataThere was the suggestion that prices will start to decline around the middle of the year, however Norgate cautioned: “We are in catch-up mode and won’t know until the end of the year.”
Russell commented that he was not happy about such high prices for something so important to consumers’ health. However, he concluded that there “was a rational explanation” for the price rises and said that the Commerce Commission would not be asked to intervene.
