Is the local economy subsidising farmers?

**spacemonkey** · 13th October 2010, 14:00

'Cept to buy Fonterra shares you need to spend a mill or two to buy an overpriced dairy farm.

**Clockwork** · 13th October 2010, 14:05

Thanks for the replies. Presumably Goodman Fielder pretty much have to buy there milk from Fonterra.

Originally Posted by doc

Getting back on track. The farmer gets "F' all compared to what Fonterra and the Supermarkets get after altering the milk. It's all about the "Ticket clippers" on the way extracting your dollar

FWIW Fonterra is a co-operative (nasty communist concept) and AFAIK only contributing Dairy Farmers can be shareholders so after its overheads all the profits go back to them anyway. However I suspect our retail duopoly are taking a generous share too.

**p.dath** · 13th October 2010, 14:40

ASDA milk in the UK:
http://groceries.asda.com/asda-estor...questid=131913
£0.86 for 1 pint. 76.1p per 1l. Not familiar with pennies, but if there are 100 pennies in a pound, then that works out to be NZD$1.61 for a litre of milk.

On Woolworths, 1l of Meadow Fresh standard milk is NZ$2.55.
http://www.woolworths.co.nz/#url=/Sh...ilk%26page%3D4

So the milk, similar to the butter, appears to be 58% more expensive to buy in NZ.

**onearmedbandit** · 13th October 2010, 14:57

Originally Posted by p.dath

ASDA milk in the UK:
http://groceries.asda.com/asda-estor...questid=131913
£0.86 for 1 pint. 76.1p per 1l. Not familiar with pennies, but if there are 100 pennies in a pound, then that works out to be NZD$1.61 for a litre of milk.

On Woolworths, 1l of Meadow Fresh standard milk is NZ$2.55.
http://www.woolworths.co.nz/#url=/Sh...ilk%26page%3D4

So the milk, similar to the butter, appears to be 58% more expensive to buy in NZ.

Your link is broken.

And what do you say about the example I provided of the 500g Anchor butter? It was cheaper in NZ by a few cents than it was in the UK. Does this mean the prices are roughly the same between NZ and the UK? Because once again all you are providing is one example that supports what you are trying to prove, but ignoring the ones that don't. I'm not picking on you over this, but I want to know how you can make a sweeping statement like that based off one example, where I can provide another example where the prices are on par.

Can you explain that much to me?

**p.dath** · 13th October 2010, 15:06

Originally Posted by onearmedbandit

Your link is broken.

And what do you say about the example I provided of the 500g Anchor butter?

I thought we reached agreement in post #32 that UK price was cheaper than NZ?
http://www.kiwibiker.co.nz/forums/sh...post1129881845

Originally Posted by onearmedbandit

It was cheaper in NZ by a few cents than it was in the UK. Does this mean the prices are roughly the same between NZ and the UK? Because once again all you are providing is one example that supports what you are trying to prove, but ignoring the ones that don't.

I provided an example - butter, and then I provided another example, milk. How many more examples do you want?

I just read another comparison on geek zone, they also found NZ milk was the most expensive.
http://www.geekzone.co.nz/Jama/3291

Originally Posted by onearmedbandit

I'm not picking on you over this, but I want to know how you can make a sweeping statement like that based off one example, where I can provide another example where the prices are on par.

Can you explain that much to me?

I've now provided two examples, of two different products and brands, and supplied a link to yet another commentary by someone else who also came to the same conclusion - who includes pricing in two other markets.

The more I look at it, the more it seems Fonterra is abusing its monopolist position in the local NZ market.

Does anyone know what Fonterra's net profit percentage was for a recent taxation year before tax and depreciation?

**p.dath** · 13th October 2010, 15:17

Looking at the Fonterra accounts:
http://www.fonterra.com/wps/wcm/conn...479f9906727cef

Total equity for 2010 was $5667m (aka, the total amount invested in Fonterra). The distributed profit was $800m. So that's a 14.1% return on the investment.

Considering the risk in the business, I think that is probably a satisfactory return.

So I guess our cost of production of milk in NZ must just be higher than other countries.

**onearmedbandit** · 13th October 2010, 15:22

Oh man your stupidity blows me away. I might start a thread titled 'It's obvious our local economy is not subsidising farmers', and use the example of the 2 500g blocks of butter as proof, and ignore your example. My thread would contain as many 'accuracies' as yours.

I give up. I just hope you are not in a position where you have to make more of a decision than what pants to wear. That's if you even wear pants.

**marty** · 13th October 2010, 16:17

Originally Posted by p.dath

£0.86 for 1 pint. 76.1p per 1l. Not familiar with pennies, but if there are 100 pennies in a pound, then that works out to be NZD$1.61 for a litre of milk.

So the milk, similar to the butter, appears to be 58% more expensive to buy in NZ.

How the fuck did you do the first calculation? A pint is 600ml (60% of one litre), not a litre.

And I doubt if it's Fonterra milk, so that argument is pointless anyway.

I can buy 2 2l of blue top/light blue top or green top milk in my home town for $5.50. That works out to 82c/pint. Or 48p. Just over 1/2 the price you are quoting, so from that, your single point research statement is debunked.

**p.dath** · 13th October 2010, 16:27

Originally Posted by marty

How the fuck did you do the first calculation? A pint is 600ml (60% of one litre), not a litre.

The ASDA web site supplies both the price for a pint, and the converted price per litre for comparative shopping. I used their numbers.

**marty** · 13th October 2010, 16:28

Originally Posted by p.dath

Exactly. Fonterra profits go directly back to the shareholder farmers which own it.

We pretty much have a monopoly provider for dairy products, like Telecom in the Telco space has been, who have no incentive but to maximise profits for its shareholders - like Telecom.

Hmm, might be time to buy shares in Fonterra. Of that's right, I can't - you have to be a farmer.

You CAN buy Fonterra shares. Buy a dairy farm. If you don't want a dairy farm, you can hardly complain about it. Try buying a Tatua dairy farm - the price of that farm will be inflated by around 30%, and you have to know someone who knows someone.

I live 500m away from a large Fonterra plant, yet I have the choice of at least 2 different suppliers of milk - Tatua, Meadowfresh - 3 with Fonterra. There's probably more