The price of butter fell 7.6% this week at the Global Dairy Trade auction, but what will this mean for the price consumers are paying at the supermarket?
In July, the price of butter had increased about 50% over the past year, pushed up by high global dairy prices.
Dairy prices fell for the seventh time in a row at the auction, with butter falling the most – but an agricultural expert told RNZ the public wouldn’t see a change in supermarket prices straight away.
The auction falls were partly due to a glut of dairy products as farmers produced more to capitalise on strong prices.
NZX Head Of Dairy Insights Cristina Alvarado said labour costs affected the price of butter in supermarkets but, over time, there should be a fall in butter prices.
“We need to take into account there’s a lot of cost that goes into the local supply chain, including manufacturing, and even though the ingredient itself has dropped internationally it’s only been in the last few months.
“It will take time for them to come through.”
However, Alvarado said if the prices of butter kept dropping there would be a downward pressure that would soon be seen coming through at supermarkets.
Alvarado believed New Zealanders were paying a “fair” price for butter at the supermarket.
“If we had much cheaper product, it would bring horrible problems internationally for us as a lot of free trade agreements would be in conflict of that.
“In terms of what you pay for butter, I would say we should probably accept it a little bit more to help our economy.”
rnz.co.nz
