This morning there was this in the Otago daily Times.
Last year, Fonterra froze its domestic milk prices from February to December in the wake of rocketing international prices.
A “softening” of the international price was behind the impending domestic market change, the spokesman said.
Progressive Enterprises spokesman Luke Schepen said it was “good to see the price of milk coming down”.
This is not good news. NZ makes a fair bit of money exporting milk and milk products and wants a relatively high price. This flows to farmers, and into more prosperous provinces, and keeps us running minimal trade deficits. And this has very little to do with the US consumer because our products are not allowed into the USA — thanks to their dairying lobby. We are facing deflation of basic food stuffs, despite our currency remaining at basically the same rate (80 US cents).
Which reminds me of Mark Steyn’s quip about small countries being able to decline and recover, while large powers crash. The NZ dollar could gently deflate. But we are not printing money. The US is. And it could crash. Because you cannot run up debt forever. at some point it will stop. You will be adjudged bankrupt, and no banker will lend you, nor will any quasi bank such as the IMF.
If you are Iceland, this is not a disaster. But if you are a global power, this destabilizes everything.
To which countries does NZ mainly export its dairy products?
My son did geography and tells me south america, the arab countries china, india, south africa… Anchor brand butter in made by fonterra
Interesting. We have a sizeable enough dairy industry, but to be honest, I don’t know that we export much, save some cheese perhaps, beyond our borders.
Though I was amused to find, “Canadian-style old cheddar” in Northern Ireland… Apparently, local dairy producers there have found they can make the same kind we do, no doubt for much cheaper…