Butter price

Press, 18 May 1984, Page 12

Butter price

Sir, — After reading in “The Press” of May 5, “Butter still subsidised,” the New Zealand consumer would like to know for what he is actually paying when he buys 500 g of butter on the domestic market. Most export butter leaves New Zealand in 25kg blocks and is reworked, packaged, stored, transported etc., which doubles the cost. Could the Dairy Board and the Minister of Trade explain to the New Zealand consumer what cost of the exported butter he has to share and what competition is faced to ensure that the domestic

market is getting the best deal? Yours, etc., F. BINKER. May 8, 1984.

[Mr Neville Martin, manager of the Dairy Industry Information Services of the New Zealand Dairy Board, replies: “The principle on which the local market price is based is that the dairy farmer should not receive a lower return from the local market (when the costs of transport, storage, promotion and the like are taken out of the equation) than he receives for export. It is suggested that the consumer in New Zealand is in some way helping to pay the cost of export marketing. That is not the case. The costing goes like this: The farmer receives $1.20 for the butterfat in each 500 g pat. Manufacturing, storage and marketing costs add sc. That product is supplied to the distributor at $1.07 (note the rebate) who adds a margin of 6 cents, the lowest for any chilled product. The retailer adds a further 11 cents margin, but often forgoes it to attract custom. There is nowhere else in the world where butter can be purchased by the consumer more cheaply.”]