1 00:00:00,040 --> 00:00:02,120 Speaker 1: How about that week in butter Ray and is it 2 00:00:02,160 --> 00:00:04,520 Speaker 1: any cheaper? No, it is not. Have we learned some 3 00:00:04,600 --> 00:00:07,200 Speaker 1: lessons around pricing in international markets? Might have In the 4 00:00:07,280 --> 00:00:09,400 Speaker 1: midst of all of it was the Finance Minister, Nikola Willis, 5 00:00:09,440 --> 00:00:12,440 Speaker 1: who was with us. Good morning, Good morning, make Did 6 00:00:12,440 --> 00:00:13,480 Speaker 1: you overplay your hand? 7 00:00:14,640 --> 00:00:16,920 Speaker 2: No, I didn't, I would I would say the media 8 00:00:16,960 --> 00:00:19,960 Speaker 2: got very excited. As you know, I've been talking about 9 00:00:20,000 --> 00:00:23,759 Speaker 2: supermarket margins and that context. I did confirm that the 10 00:00:23,800 --> 00:00:26,800 Speaker 2: next time I was speaking to Fonterra it wasn't issue. 11 00:00:26,800 --> 00:00:29,440 Speaker 2: I'd talked to them about. Obviously, they're a big food 12 00:00:29,480 --> 00:00:33,440 Speaker 2: supplier in New Zealand, so their perspectives on supermarket margins 13 00:00:33,440 --> 00:00:35,840 Speaker 2: and competition are of interest to me and I think 14 00:00:35,840 --> 00:00:38,680 Speaker 2: probably to most New Zealanders. And in the context of 15 00:00:38,880 --> 00:00:43,040 Speaker 2: butter it came up. I did talk to Miles Harrel, 16 00:00:43,080 --> 00:00:47,479 Speaker 2: the chief executive, about that, and ultimately I think it's 17 00:00:47,479 --> 00:00:50,440 Speaker 2: pretty useful that he has been talking with New Zealanders 18 00:00:50,520 --> 00:00:53,960 Speaker 2: about how much global demand there is for this beautiful product. 19 00:00:54,120 --> 00:00:56,240 Speaker 2: What did you say that that's bringing you into the world. 20 00:00:56,560 --> 00:00:58,680 Speaker 1: Why did you stand that you looked on the tiles 21 00:00:58,680 --> 00:01:00,320 Speaker 1: this week as I watched you like you had an 22 00:01:00,320 --> 00:01:02,440 Speaker 1: oozy in your handbag and you're going to gun them down. 23 00:01:02,440 --> 00:01:04,399 Speaker 1: If there wasn't a good explanation, then you came out 24 00:01:04,440 --> 00:01:08,040 Speaker 1: went oh bugging me that it isn't international markets. 25 00:01:08,640 --> 00:01:11,160 Speaker 2: No, not at all. I know, not at all. I 26 00:01:11,840 --> 00:01:16,160 Speaker 2: was very clear that commodity prices internationally are the major driver. 27 00:01:16,280 --> 00:01:19,920 Speaker 2: I've been saying that consistently for a long time. But 28 00:01:19,959 --> 00:01:23,560 Speaker 2: that also I was interested in how Fonterra in the 29 00:01:23,600 --> 00:01:26,880 Speaker 2: supermarkets divide the costs in the margin at the margin. 30 00:01:27,040 --> 00:01:29,160 Speaker 1: But you know that they know that, you know how 31 00:01:29,200 --> 00:01:30,839 Speaker 1: they do it because you work for Fonterra. 32 00:01:31,720 --> 00:01:34,399 Speaker 2: Well, I worked for Fonterra nine years ago. I never 33 00:01:34,560 --> 00:01:37,959 Speaker 2: was branded part of the business. In the branded part 34 00:01:38,000 --> 00:01:42,039 Speaker 2: of the business. Well, actually, competition should rightly be a 35 00:01:42,120 --> 00:01:44,880 Speaker 2: dynamic thing, and you would expect over a nine year 36 00:01:44,959 --> 00:01:48,680 Speaker 2: period that pricing behavior between different supermarkets and different suppliers 37 00:01:49,120 --> 00:01:51,960 Speaker 2: could change, and in the context of a very high 38 00:01:51,960 --> 00:01:54,280 Speaker 2: commodity price, I think it's a good question to say, well, 39 00:01:54,280 --> 00:01:57,000 Speaker 2: what does that mean for margin behavior? I think it 40 00:01:57,080 --> 00:01:59,920 Speaker 2: is interesting that what we've had revealed this week is 41 00:02:00,080 --> 00:02:03,680 Speaker 2: that supermarkets are choosing quite different margins on butter you've 42 00:02:03,680 --> 00:02:06,480 Speaker 2: had some say, actually we're taking a loss on it. 43 00:02:06,520 --> 00:02:08,600 Speaker 2: At the moment, it's pretty clear that with cost cos 44 00:02:08,680 --> 00:02:13,680 Speaker 2: prices it would appear loss on it. Well, well yes, 45 00:02:14,040 --> 00:02:18,079 Speaker 2: And wouldn't more of that happen if there was more competition? 46 00:02:18,320 --> 00:02:20,720 Speaker 1: What they'd all lose money? Is that where we're heading forward, 47 00:02:20,760 --> 00:02:22,360 Speaker 1: see the would. 48 00:02:22,720 --> 00:02:26,280 Speaker 2: Distinctive choices make about how they want to get customers 49 00:02:26,440 --> 00:02:29,000 Speaker 2: in the door. And what you can see in competitive 50 00:02:29,080 --> 00:02:33,200 Speaker 2: markets is that grocery chains do everything they can to 51 00:02:33,280 --> 00:02:35,760 Speaker 2: get customers in the door and get volume out the door, 52 00:02:35,800 --> 00:02:39,360 Speaker 2: and then they choose selective products, including staples like butter 53 00:02:39,560 --> 00:02:41,760 Speaker 2: or bread or milk, where they choose to take a 54 00:02:41,840 --> 00:02:44,080 Speaker 2: loss so people come in the door and buy their 55 00:02:44,080 --> 00:02:46,320 Speaker 2: other products. Who win's out of that loss. 56 00:02:46,960 --> 00:02:49,239 Speaker 1: Here's my concern for this over all debate. We're wasting 57 00:02:49,280 --> 00:02:50,959 Speaker 1: our time. We've got more important fish to fry. And 58 00:02:50,960 --> 00:02:53,079 Speaker 1: I'm watching the news last night with yet another bunch 59 00:02:53,120 --> 00:02:55,720 Speaker 1: of myopic New Zealander sitting in malls around the country 60 00:02:55,800 --> 00:02:58,519 Speaker 1: going well, why don't we have a domestic price? And 61 00:02:58,760 --> 00:03:01,079 Speaker 1: we know why we can't have domestic price, but that's 62 00:03:01,080 --> 00:03:03,760 Speaker 1: all we bog ourselves down on this stuff, and it's 63 00:03:03,880 --> 00:03:07,400 Speaker 1: wasting our time, but is the price It is because 64 00:03:07,440 --> 00:03:11,160 Speaker 1: it's a success story and we're reaping the rewards for that, 65 00:03:11,480 --> 00:03:14,720 Speaker 1: and instead of celebrating it, we're having stupid meetings explaining nothing. 66 00:03:15,440 --> 00:03:19,240 Speaker 2: Well, look, I do celebrate our successful dairy industry. I also, 67 00:03:19,400 --> 00:03:23,160 Speaker 2: as a representative, think that if New Zealanders are really 68 00:03:23,280 --> 00:03:26,280 Speaker 2: engaged in an issue, it's not enough to just say 69 00:03:26,320 --> 00:03:28,880 Speaker 2: to them, sorry, not an important issue, not going to 70 00:03:28,960 --> 00:03:31,480 Speaker 2: talk about it. I think it's good that we've now 71 00:03:31,639 --> 00:03:35,040 Speaker 2: had communication about here's how the global price works, here's 72 00:03:35,040 --> 00:03:38,680 Speaker 2: how's most of the price is formed, Here's what happens 73 00:03:38,720 --> 00:03:40,680 Speaker 2: in terms of competition, here's what you can expect in 74 00:03:40,800 --> 00:03:43,680 Speaker 2: terms of the price in future. And politicians do have 75 00:03:43,760 --> 00:03:45,840 Speaker 2: a choice. We can say, look, I'm not going to 76 00:03:45,880 --> 00:03:48,840 Speaker 2: talk about that, it's not important, but I am not 77 00:03:48,960 --> 00:03:51,760 Speaker 2: prepared to dismiss questions from New Zealanders in that way. 78 00:03:51,880 --> 00:03:54,200 Speaker 2: I think that they have got more information this week, 79 00:03:54,960 --> 00:03:58,760 Speaker 2: and look, I'm with you. A successful dairy industry creates 80 00:03:58,920 --> 00:04:02,280 Speaker 2: jobs and better income for Kiwi's. That is excellent. It's 81 00:04:02,360 --> 00:04:06,120 Speaker 2: also the reality, but it is expensive in supermarkets right now, 82 00:04:06,520 --> 00:04:09,520 Speaker 2: so people are more interested in commodity pricing and margin 83 00:04:09,600 --> 00:04:12,080 Speaker 2: pricing than they've ever been. And I don't think it's 84 00:04:12,120 --> 00:04:13,120 Speaker 2: a sin to talk about it. 85 00:04:13,480 --> 00:04:16,600 Speaker 1: Super quick word if you would on Adrian or why 86 00:04:16,640 --> 00:04:19,159 Speaker 1: did you make it such a big deal? Guy's self important? 87 00:04:19,240 --> 00:04:21,040 Speaker 1: He packed a big sat at a couple of meetings, 88 00:04:21,080 --> 00:04:23,040 Speaker 1: one of which was with you, why didn't you say that? 89 00:04:25,040 --> 00:04:27,640 Speaker 2: Well, all I have said is that. 90 00:04:27,839 --> 00:04:29,720 Speaker 1: I know what you've said, but what you should have 91 00:04:29,760 --> 00:04:32,359 Speaker 1: said is the guy myself importantly stormed in my office, 92 00:04:32,400 --> 00:04:33,960 Speaker 1: yelled a bit at me, and then quickly had to 93 00:04:34,000 --> 00:04:35,040 Speaker 1: write a letter and then he quit. 94 00:04:36,200 --> 00:04:39,440 Speaker 2: Well, my perspective on it has been he was employed 95 00:04:39,520 --> 00:04:43,720 Speaker 2: by the Reserve Bank. They undertook employment discussions with him, 96 00:04:44,160 --> 00:04:46,960 Speaker 2: he resigned. Not for me to get into the middle 97 00:04:47,000 --> 00:04:52,200 Speaker 2: of that employment relationship and start speculating and using have 98 00:04:52,279 --> 00:04:56,760 Speaker 2: gone on, Well, whether or not that was relevant to 99 00:04:56,920 --> 00:05:01,080 Speaker 2: his resignation, Well was the Reserve Bank. Well that's a 100 00:05:01,160 --> 00:05:03,000 Speaker 2: matter for the Reserve Bank and not a matter for 101 00:05:03,120 --> 00:05:06,440 Speaker 2: me to speculate on. Wherever I have been able to 102 00:05:06,480 --> 00:05:08,320 Speaker 2: be candid, I have been. But you've got to remember 103 00:05:08,360 --> 00:05:11,480 Speaker 2: there's two things I have to protect here. One independence 104 00:05:11,520 --> 00:05:14,039 Speaker 2: of the Reserve Bank and their role as an employer. Two, 105 00:05:14,720 --> 00:05:17,520 Speaker 2: I shouldn't be the one giving rise to potential legal 106 00:05:17,720 --> 00:05:21,000 Speaker 2: financial risk to the New Zealand taxpayer. As much as possible, 107 00:05:21,080 --> 00:05:22,560 Speaker 2: I think it's right for me to stay out of 108 00:05:22,600 --> 00:05:22,880 Speaker 2: it all. 109 00:05:22,960 --> 00:05:24,920 Speaker 1: Right, fair enough, you have a good weekend. Appreciate it 110 00:05:25,000 --> 00:05:27,960 Speaker 1: very much. Nichola Willis, the Finance and Economic Minister. 111 00:05:28,600 --> 00:05:31,440 Speaker 2: For more from the My Asking Breakfast, listen live to 112 00:05:31,600 --> 00:05:34,640 Speaker 2: news talks that'd be from six am weekdays, or follow 113 00:05:34,720 --> 00:05:36,240 Speaker 2: the podcast on iHeartRadio.