The Bottom Line

Actually, Australia has far lower density of people and Far greater distances, and milk is cheaper. GST is usually factored into world comparisons. It's higher than NZ in many countries ( though England and Australia don't have GST on milk.)

To be clear , Fonterra is charging the same 'international standard price'( which fluctuates ) for milk , before transport and processing etc is added on - they admit that themselves, when probed.

So that's the starting point. If they can get $10 per unit of milk from London and shipping is covered, then they'll charge NZ $10 for the same unit here, transport covered. No favours.

Furthermore , they exploit brandpower within NZ, to raise revenue . EG, in the Auckland market they'll supply same milk cheap and call it " Dairy Vale" ( I think ) but charge Much more for brands with kudos - like Anchor. That branding price spread should be compressed greatly.

So, they exploit the local market for max profit , despite the favoured, Dairy Board status that got them there. When less than 5% of production is going into NZ market......and people are stretched.

What should happen is the Gov supports these farmers properly - many in danger of foreclosure now - for starters by securing their mortgages in a nationalised Ag Bank ( not bloody Rabo ). Then puts more regs onto Fonterra and forces Fonterra to sell into the NZ market ( not Chinese Synlait ) at rock bottom prices. Will make almost no difference to the farm-gate price.

Meanwhile Fonterra has done big bulk discounting overseas before leading to stunningly low prices in London .

Such regulating, plus farmer support, is the ideal. Though it contradicts the 'world free market' theory whereby farms become foreign corpora

Oh, regarding comments thinking the Chinese won't pay tax etc, they will pay what they need and not a cent more. But everywhere else will be cheap cheap cheap - processing, transport, even the farm workers will likely slowly be changed to Chinese staff, relying on the huge difference in our currencies (artificially controlled by Beijing) to make the job attractive to them, while their families remain in China. We will give away our skills in the farming/processing areas which will quickly be copied by the Chinese. Ta daaa, we have given away all our advantages and over time, our reputation as the worlds top quality milk producers.

Again, I aren't racist, I absolutely love Chinese people (as my Chinese girlfriend can attest to), but I know how they do business. They vertically control industries, drive the price low, sell the products as imitations and cream the profit. Give it 20 years and NZs current advantages will all have virtually disappeared. I know I am talking about protecting our industries, very anti-globalisation. I aren't normally but I can see the long term consequences of foreign owned farms - clearly the OIO cannot.

Why not create a rule wherby foreigners can only lease land - or own land that is zoned industrial? Many other countries do it, those that don't (look at England) are going down the gurgler as they get bought up by rich Arabs/Asians who spend 5 weeks there in the summer, own the land only for face value and let it go fallow or convert it to their purposes. Again this is a great example of our governments looking after corporate interests and not its citizens in the long run. When will we get a government that looks long term?

These farms should never have been sold to China, they should have been leased. I live in China, I aren't racist or blinkered, I love this place, but I understand how the Chinese operate. Mr Beresfords comments are spot on. While currently the Chinese owners have no plans to process their own milk, they damn well will. There is a plant in South Canterbury that other Chinese have a large stake in, if its not obvious to everyone it should be - they are slowly taking over the processing of milk as well as the production. Once they have their own processing facilities, their own farms, it won't be long before fonterra has to lower its payouts to compete. The result will of course be lower payouts for farmers and our economy takes a hit.

Regarding the land ownership, NZer's or Chinese people for that matter, cannot own land in China. Everyone leases it for a fixed term from the government. These are the rules and foreign investment in China trucks along just fine. Essentially by selling the land to Chinese buyers, we just increased the size of China from an economic sense. Do you think they will EVER sell that land? If you do, you don't know Chinese people. And this is a major problem in New Zealand, we simply do not understand how Chinese people operate.

We want a level playing field and thought we got that with a free trade agreement. But the rules, cultures and people are different and they understand us a hell of a lot better than we understand them.