The milk paradox (14 Nov, 2014)

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Re: The milk paradox (14 Nov, 2014)

Postby DigiDog » Fri Nov 14, 2014 10:50 am

goosemoose wrote:What would happen if someone started importing milk. You could probably buy it a hell of a lot cheaper overseas, bring in a tanker load, bottle it up and sell it for half the price. I wonder how quickly the prices would come down then.

Nah! Fonterra would reduce their pricing in your local area until you no longer made a profit and went bust. Then they'd increase their prices again. They did exactly that on the West Coast not so long ago.
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Re: The milk paradox (14 Nov, 2014)

Postby virtualkiwi » Fri Nov 14, 2014 10:52 am

Same problem with the electricity market. Power companies have dropped the buy back rate they pay to domestic users who generate on the grounds the rate they were paying was not economic given the wholesale pricing, yet retail pricing continues to rise.

The trouble with this government is they claim to support free market economics, yet there seem to be numerous situations where laws of supply and demand are NOT being applied, or applied unevenly, usually to the benefit of mates of the National Party.
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Re: The milk paradox (14 Nov, 2014)

Postby DigiDog » Fri Nov 14, 2014 11:11 am

virtualkiwi wrote:Same problem with the electricity market. Power companies have dropped the buy back rate they pay to domestic users who generate on the grounds the rate they were paying was not economic given the wholesale pricing, yet retail pricing continues to rise.

My solar installer made it clear from the start that we shouldn't expect to make any money selling power back to the power companies. As an existing customer, I'm still getting 17c per unit for any power I feed back, but that's only a minor part of the equation. Contact are going to reassess that in January and I fully expect they'll drop the rate for everyone. But that is not the reason I installed solar. Once our system is paid off in 7-8 years, it'll still be cranking out power for up to 25 years... free electricity. That's my main motivation for going solar.

virtualkiwi wrote:The trouble with this government is they claim to support free market economics, yet there seem to be numerous situations where laws of supply and demand are NOT being applied, or applied unevenly, usually to the benefit of mates of the National Party.

And they're quite blatant about it. Millions in government funding going to private schools, investor bailouts for finance companies, government grants being channelled to mates, the list goes on. Yet half the country still voted for them this time. It seems to me that common sense has deserted the average kiwi, to be replaced by a national desire for masochism. And I can't for the life of me work out why our once proud little nation just rolled over and allowed this to happen.
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Re: The milk paradox (14 Nov, 2014)

Postby goosemoose » Fri Nov 14, 2014 11:47 am

What you solar chaps should do it channel all your spare electricity into a giant bar heater on your back lawn. Sooner or later they're going to need this solar power that you generate. Then you can set the rate.
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Re: The milk paradox (14 Nov, 2014)

Postby RoddyAxn » Fri Nov 14, 2014 7:59 pm

But the Australian banks are owed $17 per milk butter fat kg.

And $8 pay outs have fallen to $4.30 per kg.

Free hold inherited farms have been mortgage levered to the max to buy the next door farm.

The fire sale on New Zealand farm land is coming.

It was shown in the Chatham Islands when i lived there 1995-1997

Years before farmers had a few cows the children will milk before school.

Then a cheese factory was set up on the island and big money was paid for surplus milk.

So more cows were kept after calving and the children worked harder before school and some times late.

Then it was offered that vacuum milking machines were able to be purchased.

Of the farmers went into debt to buy the stainless steel wonders. Milk prices were great.

Then the cheese factory closed up.

No place for the surplus milk.

Debt unable to be paid.

Bitterness was still in the air almost a century latter.

So New Zealand is wobbling to a Chatham island sour milk story.

Diversify is a forbidden word to New Zealand

But why. Sheep farming for milk into feta cheese is a ten fold better option than cows milk.

Sheep give wool and meat.

Less intensive on the land.

And sheep can even be train to milk themselves in remote sheds and pump back to a central location.

Sheep can use more hilly land.

A win win win for all New Zealand. But moo is all you hear from SWDC when you stop the chain saw.

Think outside the box and park your prob in the shade of a comet shadow.
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Re: The milk paradox (14 Nov, 2014)

Postby Screw » Fri Nov 14, 2014 10:23 pm

goosemoose wrote:I heard some marketing / PR weasel on the wireless this morning saying it's all got to do with contracts between suppliers (Fontera) and the wholesalers/retailers (supermarkets). I think these contracts are sealed up whereas the export one is done every auction time which is every few weeks. This is the typical NZ way though, small minded greediness. They do it because they can.

I feel sorry for those parents who can't afford to give their kids milk but everywhere they turn are scolded by the health policy finger waggers and tut tutters for giving them the much cheaper option of fizzy drinks. I've certainly cut down my consumption of milk, replaced it with the much cheaper option of beer!

What would happen if someone started importing milk. You could probably buy it a hell of a lot cheaper overseas, bring in a tanker load, bottle it up and sell it for half the price. I wonder how quickly the prices would come down then.



Yea Goosey the milk auctions are once per month. I agree there is a jack-up between the markets and Fonterra. In the old daze there was a guaranteed price for the cockies, it was set at the average price. When the price rose higher than the average, the extra was taken off and put into an investment scheme. When it dropped below, money was taken out of the investment and used to increase the price to the average again. The price was re-set every 4 years. The result of this was stability -- the cockies knew how much they would get each year and the price of milk delivered to our houses (remember that?) remained the same.

I have suggested in the past that people should go out and deal directly with the local cockies and get their milk directly from there. Even if they are contracted to Font. they can still sell up to 10% of production elsewhere.
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Re: The milk paradox (14 Nov, 2014)

Postby Kiwiiano » Sat Nov 15, 2014 6:33 am

latewings wrote:Fonterra, Apple and Pear Marketing board, NZ Meat Board....

Always amazed me when shopping in Waitrose or Sainsbury in Putney where I lived for several years to see just how good the food NZ produces and exports is, and how cheap too. Then I came back, and found the quality offered in the Supermarket was dire, and the price, extortionate.

This issue has been going on for a very long time. It will never change as Fonterra et-al will never be held to task over their legitimate business practices.

Still a lot better in quality than over the ditch. At least NZ can import food when local supply runs short.

To be fair,maybe Sainsbury, Waitress et al are buying NZ products in 20 container batches where NZ chains are only by the truckload.
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Re: The milk paradox (14 Nov, 2014)

Postby aardvark_admin » Sat Nov 15, 2014 6:50 am

Kiwiiano wrote:To be fair,maybe Sainsbury, Waitress et al are buying NZ products in 20 container batches where NZ chains are only by the truckload.

But to be fair(er), the trucks that deliver stuff to our supermarkets only have to trundle a few hundred Kms, the containers destined for Sainsburys have to travel half way around the world by ship and then trundle a few hundred Kms to the stores involved.

Economies of scale are not linear -- they rapidly become a law of diminishing returns so I don't think that explains the problem.
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Re: The milk paradox (14 Nov, 2014)

Postby Anaru » Sat Nov 15, 2014 11:12 am

I'm pretty sure our dairy exports to the UK are similar if not less than what is consumed domestically, the only real difference between here and there is the level of competition. New Zealand contributes around 2% to global dairy production, so we're pretty vulnerable price wise in the sense we have no influence with such little market share.
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Re: The milk paradox (14 Nov, 2014)

Postby DigiDog » Sat Nov 15, 2014 12:23 pm

Unfortunately we've put all of our eggs into one basket, metaphorically speaking. The vast majority of the milk we produce goes to China. In 2012, NZ provided 65% of all the dairy products imported into China. It's been a great little market for us.

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However the rest of the world is also ramping up milk production and the Chinese reckon they'll be self-sufficient in milk within five years. Remember what happened when we sold kiwifruit vines to the Chinese? Fonterra is even setting up example farms in China to show them exactly how to do it. And once that happens, Fonterra will be left with a mountain of low value milk powder.
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