Sunday, August 7, 2011

The Price of Milk


It was interesting watching Andrew Ferrier earn his his money on Q&A (for his 15 min he earned about $500, based on his $100,000 a week salary) and David Carter justifying the taxpayer subsidising the dairy industry.

The following points were established during the two interviews and the following panel discussion:

  • The price of milk is determined by the price in overseas markets and New Zealanders should pay the market rate.
  • We can lower the price of dairy produce sold in New Zealand, and have done, but it is not sustainable.
  • The tax payer does subsidise the dairy industry, but we are dependent on export earnings and need to support our farming industry.
  • Farmers shouldn't pay their share of the ETS until science finds solutions for managing their emissions.
  • If the ETS was introduced to farming some farms would become uneconomic and as our most important industry it deserves special treatment.
  • It is not the price of milk we should be concerned about but decent wages and it will take time to advance these.
  • The fact that Fonterra has a 90% dominance of the New Zealand market probably needs to be looked at further to ensure there is genuine competition.
  • It is natural that the Chinese will want to buy into New Zealand farms and farming industry to ensure their own food security.
  • New Zealand has good safeguards around foreign investments through the Overseas Investment Office (It is interesting that one of its main functions is to encourage overseas investment).
There were some questions that weren't asked that I would have liked to hear the answers to:
  • What responsibility should the dairy industry have regarding the increasing degradation of our waterways?
  • If the taxpayer is subsidizing the costs of the industry's greenhouse gas emissions and the cost of irrigation and water pollution why should we also pay the inflated world price for the end product?
  • If the dairy industry had to pay for the external costs of the industry wouldn't they be more likely to make an effort to reduce those environmental costs?
  • How can the industry promote a clean green environmental image when it is one of our largest producers of greenhouse gases, the main cause for the increasing degradation of our waterways and powers its largest factory (Edendale) with lignite (the dirtiest of all fossil fuels)?
  • Given that there is no will to reduce the cost of milk for New Zealanders and raising incomes will take time, how do we support struggling families now (and the many children suffering through inadequate diet and poor health)?
  • If other industries were treated as sacred cows like the dairy industry and were subsidised by the taxpayer to the same extent would they not also become as profitable?
I wish I had the opportunity to sit in Guyon Espiner's seat and ask those questions.

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