Price formula amended

01-10-2009 | Not Specified

Federated Farmers welcomes Agriculture Minister David Carter's amendments to the pricing formula for regulated milk.

"Co-operative dairy farmers were sick of having their pockets picked by independent processors," says Federated Farmers dairy chairman Lachlan McKenzie.

"Under the unamended pricing formula, independent processors buy milk at a lower price than co-operative farmers receive for it," he says.

"This travesty could not be allowed to continue, as co-operative farmers have been giving value away to independent processors for too long. Offering milk to independent processors at the farm-gate price plus 10 cents per kilogram of milk solids also allows them to make good business decisions based on real and fair prices.

"Unlike co-operatives, most independent processors are owned by overseas investors. The money these investors saved when buying cheap milk off the co-operative went directly from the green fields of New Zealand to the boardrooms of overseas companies.

"On the other hand, co-operative dairy farmers invest a large percentage of their profits back into the domestic economy. When these profits are eroded, every New Zealander suffers.

"Clearly co-operative dairy farmers have been subsidising the back pockets of these overseas investors for five of the past six seasons. This was uncovered in a review of the pricing system undertaken in 2008.

"Amending the pricing formula for regulated milk is certainly a step in the right direction."

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