AUCKLAND (CU)_Food prices are currently soaring across the globe, with millions of people finding it difficult to make ends meet. In New Zealand, grocery food prices rose by 6.4 per cent in April, following a 9.4 per cent hike in fruit and vegetable prices, while beef mince was also up by 13 per cent. cost of staples like milk and cheese have also risen by 8.5 per cent and 18 per cent, respectively. Against this backdrop, the country’s largest dairy company is “doing it very tough”, unable to reap bumper profits.
Fonterra is an Auckland-based dairy co-operative responsible for about 30 per cent of the world’s dairy exports. The company’s chief executive recently revealed that the manufacturer is “struggling” with profits down more than 80 per cent, owing to rising food prices. “Food inflation is really biting into the purchasing power of consumers,” Fonterra’s Miles Hurrell said. “That’s not lost on us. Dairy is certainly part of that mix, as are a lot of other staples, whether it be meat or fruit or vegetables, which are also in a similar situation.”
Hurrell retail prices of dairy products supplied to the domestic market are set by supermarkets, which are expected to make $430 million a year in excess profits, according to a Commerce Commission’s review. Meanwhile, the dairy company’s New Zealand consumer business saw profits drop by more than 80 per cent during the nine months which ended on 30 April, while volumes have remained unchanged during this period. The wider Fonterra group on the other hand, reported a 14 per cent fall in pre-tax profit. “When you look at all our businesses globally, our consumer business in New Zealand is actually one that’s very much doing it tough, suggesting that the margins are low comparative to other markets,” Hurrell said.
