Fonterra chief executive Miles Hurrell has defended the soaring cost of butter in New Zealand, saying the revenue generated from rising global prices represented a “good news story” for the national economy.
Speaking after a meeting with the Finance Minister in Wellington on Tuesday, Hurrell said butter prices, which had surged by over 60% in the past two years, were driven largely by demand from overseas markets such as China.
“Roughly 80% of the price of that is determined by that international market,” he said, adding the remaining cost included margins for retailers, processors, and distributors, plus GST.
Hurrell ruled out a two-tier pricing system where dairy products would be sold at a lower price domestically and at a market rate internationally.
“We’re a cooperative, and our job is to go and support the 8500 family farms that we support here in New Zealand.”
Fonterra chief executive Miles Hurrell says it is good news for New Zealand as a whole. (Source: 1News)
Fonterra expected to generate $25 billion in revenue this year, with 95% of its product exported.
Hurrell said the role of the cooperative was to deliver international value back to farmers but he recognised cost-of-living pressures facing New Zealand households.
“We acknowledge and appreciate that things are tough and New Zealand economy right now, the cost of living that is a topic of conversation we hear every day, that is not lost on us.”
Hurrell’s meeting with Willis followed weeks of public frustration over the price of butter, which has become a symbol of the broader cost-of-living crisis.
The price for a 500g block now averaged $8.60, with some brands exceeding $11. While global dairy prices dipped slightly in July, they remained at their highest levels in more than five years.
Fonterra said it sold both domestically and internationally at prices set by the global market.
“Selling it for less would mean a business choosing to sell at a loss or giving a subsidy,” the company said in a recent statement.
“That’s not a sustainable model for any business long term.”
Finance Minister Nicola Willis says the price of butter will be discussed at her meeting with the giant co-op. (Source: 1News)
Hurrell was also questioned today about his salary, with 1News asking whether he understood what it was like for consumers facing high grocery prices.
“Absolutely. I was in the supermarket myself last night,” he said.
Pressed further, Hurrell declined to discuss his pay directly, saying: “It’s not about what I get paid.”
However, he said Fonterra’s annual report, due in a few months, would show his remuneration to be “just under $6 million”.
Finance Minister Nicola Willis said the meeting with Hurrell had reinforced her interest in increasing supermarket competition to put downward pressure on the price of butter.
“All roads lead back to supermarket competition. I continue to believe that is the most powerful lever that the Government has on this issue.
“We will never be able to control global dairy prices. What we can influence is the amount of competition in New Zealand’s grocery sector and we have a lot of work underway to address that.”
