May 24, 2011

New Zealand's dairy prices to remain stable

New Zealanders will not be affected by surging dairy prices in spite of farmers paying for greenhouse gas emissions, according to Labour leader, Phil Goff.

Goff said on Monday (May 23) that Fonterra assured him that the price of milk, cheese, and meat was set internationally and would not be affected by the Emission Trading Scheme (ETS). According to Goff, he asked Fonterra whether an increase in the Emission Trading Scheme will cause a rise in the price of milk in New Zealand and the reply given was absolutely not.

Goff was responding to comments by Prime Minister John Key, who said Labour's proposal to bring the agriculture sector into the ETS in 2013 would increase the price of dairy products.

Goff promised businesses that they would receive NZD800 million (US$633 million) boost for research and development (R&D) through tax credits at 12.5%, and farmers would pay for it.

He said farmers would start paying for their greenhouse gas emissions earlier than the government's 2015 entry date for the sector.

Key said the changes would put up the price of milk, meat, butter and cheese. "This is coming from the very people who have been telling us for the last two year's those things are too expensive. It is crazy, our agriculture sector will be the only one in the world that is in an ETS and the impact of that will be to make it uncompetitive on an international scale and New Zealand consumers will pay more."

Goff said Key's comments were silly and dishonest. "He said to you time and again that prices are set internationally, not by input costs in New Zealand."

Farmers could afford to pay for greenhouse gas emissions as they were getting the best prices in a generation, he said. "I sent three head of cattle to the works last week. I got the best prices I have ever got. I do not accept that farmers are in such a position that they cannot meet the cost of the ETS and must be subsidised by you and I as New Zealand tax payers. Farmers should be treated in the same way as any other section of the community. Everybody has got to do their bit. Everybody has to pay their share. We are not asking farmers to do more than that," Goff said.