April 13, 2011

 

A new round of price hikes to hit Australian dairy products

 

 

A series of price hikes will hit Australian dairy products, including a 12% hike in the price of common cheeses and an up to 10.2% increase in butter, starting next week, stated Goodman Fielder, an Australasian food manufacturer.

 

A company spokesman said the increases are a result of the latest wholesale milk price rise from national milk price setter, Fonterra.

 

Fonterra, which controls more than 90% of the country's raw milk supply, attributes rising dairy prices to strong international commodity prices.

 

In February, in response to public anger, the dairy giant's consumer goods manufacturing division Fonterra Brands announced it would absorb any milk price increases from its parent company for the rest of the year, rather than pass them on to Kiwi shoppers.

 

The two major supermarket chains later announced their own milk price freezes.

 

But a Goodman Fielder spokesman said that three days after announcing that price freeze, Fonterra increased the price it charges Goodman Fielder for wholesale milk from US$7.30/kg of milksolids to US$7.90/kg.

 

A Fonterra spokesman said Goodman Fielder had made its own commercial decision to pass on any cost increase to retailers.

 

Fonterra charged a milk price, based on international prices, to all domestic suppliers, including Fonterra Brands and Goodman Fielder,and had chosen not to pass on any price increase to consumers this year, he said.

 

Two Nelson cafe proprietors said this morning that they would try not to pass on the latest price increases to customers.

 

The Suter Cafe co-owner Katrina Kallil said it was aware how the current economic situation was affecting customers. "We are well patronised and lucky to have the cafe in the gallery. We are hoping not to put the prices up."

 

Morrison Street Cafe manager Pia Isle said it would also try to absorb the price increases. "It will affect us, but we will just have to deal with it. I don't think the prices will go up."

 

By comparison, in Australia Woolworths was selling 500g of Homebrand butter for AUD2.49 (NZD3.36, US$2.61).

 

Woolworths Australia was selling 500g of Mainland colby cheese for AUD8.06 (US$8.45). In Woolworths in New Zealand, the same cheese was selling for US$9.57.

 

Consumer competition watchdog the Commerce Commission is currently deciding whether to launch a full price control inquiry into domestic milk prices.

 

Its preliminary investigation follows several calls for an inquiry and an official complaint alleging that Fonterra is artificially inflating the price of milk.

 

The complainant is calling for the milk price to be set independently of Fonterra.