Milk price too rich for many Kiwis

02:55, Jul 02 2009

The price of milk has gone up by almost a quarter in two years, putting it beyond the budgets of many low-income families, research suggests.

A University of Otago study has found many families are buying cheap fizzy drink instead of milk, because it is too expensive.

In just two years, the price of two litres of milk has increased by more than 20 per cent, or at least 57 cents.

A 1.5-litre bottle of fizzy drink can cost less than a dollar.

Researchers Louise Signal and Moira Smith want the Government to bring in price controls to make milk more affordable.

They are also advocating that milk be included in the new "breakfast in schools" programme in low-income areas.


"The price of milk is high, and it is high compared to what it was in the past in New Zealand," Dr Signal said.

"The price of a healthy diet is increasingly difficult for low-income families to afford."

Milk prices have remained static compared with a year ago, despite dairy payouts plunging from about $7 per kilogram of milk solids to about $4.55. With the Consumer Price Index factored in, the average retail price for 2 litres of milk $3.21 is the same as in May 2008.

The study found 38 per cent of children drink milk daily, 34 per cent weekly, and 17 per cent not at all.

The researchers say the Government contributed to rising milk prices by removing subsidies and control from the milk industry, applying GST to food, and by the linking of retail prices to international commodity prices.

"Serious health inequities have developed, particularly amongst lower socio-economic groups and Maori and Pacific peoples," Ms Smith said.

Meanwhile, fizzy drinks have fallen in price and are often heavily discounted.

"Unhealthy fizzy drinks, which contribute to our high rates of obesity and tooth decay, are cheaper and more heavily advertised than milk."

Fonterra Brands New Zealand managing director Peter McClure said the company did not set the retail price of milk, but had reduced wholesale prices this year.

"The retail price of milk is dynamic and influenced by a complex range of competitive factors, including global dairy prices, operating costs, consumer preferences and retailer actions," he said.

"We encourage people to shop around because there are big differences in the retail price of products depending on where they are sold."

Federated Farmers dairy section chairman Lachlan McKenzie blamed the high cost of milk and cheese on supermarket chains not dropping their prices.

"There's no reason for anyone to go hungry we can grow enough to feed 100 million people in New Zealand," he said.

"If people can't afford it, that's a problem for our welfare system."


The whiff of warm, rancid milk on a summer's day is a not-so-fond memory of many Kiwi kids who lived through the era of free milk in schools.

The scheme introduced by the Labour government in 1937. It aimed to help "delicate children grow into healthy citizens", as well as getting rid of a surplus of milk.

By 1940, 80 per cent of schoolchildren got their half-pint a day. It lasted until 1967, by which time it was using 3.5 million gallons a year and was costing the government too much. Some were outraged, others delighted.

Before refrigerators were common, crates of milk were left sitting outside classrooms. Come morning break, the milk unpasteurised and with a layer of cream on the top was often curdling.

There have been calls to bring back the scheme, but it has never been been revived, although Sanitarium and Fonterra have begun a programme giving children in 285 low-decile schools Weet-Bix and milk to "kick start" their day.

The Dominion Post