1
00:00:00,200 --> 00:00:02,679
Speaker 1: Right, Yes, it is the cost of living. Dairy becoming

2
00:00:02,720 --> 00:00:06,240
Speaker 1: more expensive for consumers. This as the global dairy trade

3
00:00:06,240 --> 00:00:08,800
Speaker 1: auction increase the last week one point four percent. The

4
00:00:08,840 --> 00:00:10,880
Speaker 1: whole milk powder was up five percent. We told you

5
00:00:10,880 --> 00:00:14,560
Speaker 1: about that. Farmer payouts are expected to be up massively.

6
00:00:15,280 --> 00:00:17,440
Speaker 1: As it stands, a three liter bottle of milk will

7
00:00:17,440 --> 00:00:20,000
Speaker 1: cost you and I at the supermarket almost seven dollars,

8
00:00:20,079 --> 00:00:23,919
Speaker 1: butter and yogat ten bucks. Why other prices continue to

9
00:00:23,920 --> 00:00:27,360
Speaker 1: trened up? Brad Olson Informetrics Principal Economists, Good morning, Bread,

10
00:00:28,040 --> 00:00:30,160
Speaker 1: good morning. What do you reckon about selling New Zealand?

11
00:00:31,600 --> 00:00:33,800
Speaker 2: Well, I think there's two parts going on to this.

12
00:00:33,920 --> 00:00:36,120
Speaker 2: You've got both supply and demand, which is of course

13
00:00:36,120 --> 00:00:39,800
Speaker 2: the classic economists response. But on the supply side, you

14
00:00:39,840 --> 00:00:42,440
Speaker 2: look around the world and the likes of the US

15
00:00:42,479 --> 00:00:45,680
Speaker 2: and the Europeans aren't producing quite as much milk, certainly

16
00:00:45,760 --> 00:00:47,920
Speaker 2: not as much as they might have been expecting or

17
00:00:47,960 --> 00:00:51,640
Speaker 2: hoping for, so there's less going into the production cycle.

18
00:00:51,920 --> 00:00:54,600
Speaker 2: But at the same time, on the demand side, there's

19
00:00:54,640 --> 00:00:56,720
Speaker 2: still quite a bit of demand out there. People are

20
00:00:56,720 --> 00:00:59,680
Speaker 2: wanting to buy this stuff, and in particular I mean

21
00:01:00,120 --> 00:01:02,880
Speaker 2: to cross the entire dairy chain, but you look particularly

22
00:01:02,960 --> 00:01:05,640
Speaker 2: at some of the sort of fattier options, your butters

23
00:01:05,880 --> 00:01:08,440
Speaker 2: and the lake are quite a bit more demands to

24
00:01:08,520 --> 00:01:11,800
Speaker 2: those over time. Even China, which hadn't been all of

25
00:01:11,840 --> 00:01:15,040
Speaker 2: that strong of a buyer through parts of last year,

26
00:01:15,319 --> 00:01:17,399
Speaker 2: have been coming back a bit more recently, and so

27
00:01:17,520 --> 00:01:19,920
Speaker 2: all of a sudden you've got this position globally where

28
00:01:20,200 --> 00:01:23,160
Speaker 2: everyone wants more dairy is not necessarily a huge amount

29
00:01:23,240 --> 00:01:26,280
Speaker 2: more dairy, and that's pushing prices up. Now for New

30
00:01:26,319 --> 00:01:29,520
Speaker 2: Zealand farmers, that's actually sort of the best position that

31
00:01:29,560 --> 00:01:31,800
Speaker 2: we can find ourselves in at the moment, because our

32
00:01:31,880 --> 00:01:35,520
Speaker 2: dairy production is up one point three percent over the

33
00:01:35,600 --> 00:01:38,560
Speaker 2: last twelve months, so we've got more product that we

34
00:01:38,600 --> 00:01:40,800
Speaker 2: can start to send the way. We've got a lower

35
00:01:40,840 --> 00:01:44,080
Speaker 2: exchange rate, which means that effectively we're able to make

36
00:01:44,160 --> 00:01:46,840
Speaker 2: a bit more money as we go forward. All of

37
00:01:46,840 --> 00:01:49,920
Speaker 2: that means that the payouts delivering I think it's close

38
00:01:49,960 --> 00:01:53,400
Speaker 2: to three point four three point five billion dollars more

39
00:01:53,440 --> 00:01:56,080
Speaker 2: than last season's payouts over the year head. I mean,

40
00:01:56,240 --> 00:01:58,960
Speaker 2: that's good for producers, it's good for farmers. But at

41
00:01:58,960 --> 00:02:01,480
Speaker 2: the flip side, the double edged sword here is that,

42
00:02:01,560 --> 00:02:04,640
Speaker 2: as you've been highlighting, consumers are wearing that as well.

43
00:02:04,680 --> 00:02:06,320
Speaker 2: So it's a tricky balance here.

44
00:02:06,520 --> 00:02:08,720
Speaker 1: Yeah, we just pay the world price, don't we. I mean,

45
00:02:08,720 --> 00:02:10,720
Speaker 1: we don't get special treatment here in New Zealand, and

46
00:02:11,320 --> 00:02:13,080
Speaker 1: nor should we.

47
00:02:13,080 --> 00:02:15,920
Speaker 2: Well, it's difficult. I mean if we did get special treatment,

48
00:02:15,960 --> 00:02:18,760
Speaker 2: you'd be saying to farmers please leave some pretty seriously

49
00:02:18,760 --> 00:02:21,040
Speaker 2: good money on the table and sell it for chief

50
00:02:21,040 --> 00:02:22,680
Speaker 2: in New Zealand. I mean, you're not going to double

51
00:02:22,680 --> 00:02:26,240
Speaker 2: exports like that. But I think as well, what you

52
00:02:26,360 --> 00:02:29,400
Speaker 2: do generally see is that there's different types of products

53
00:02:29,400 --> 00:02:31,600
Speaker 2: that go into different types of markets. But yeah, the

54
00:02:31,680 --> 00:02:35,679
Speaker 2: New Zealand price is tasted to a degree by that

55
00:02:35,840 --> 00:02:38,880
Speaker 2: international price, making sure there's not too much of a

56
00:02:38,919 --> 00:02:41,240
Speaker 2: big gap that starts to come through, because if there

57
00:02:41,280 --> 00:02:43,359
Speaker 2: did start to be that big gap, that's where you

58
00:02:43,400 --> 00:02:46,000
Speaker 2: start to see effectively New Zealand give up some of

59
00:02:46,000 --> 00:02:47,080
Speaker 2: those international gains.

60
00:02:47,080 --> 00:02:48,680
Speaker 1: There was a lot of talk about this at the weekend,

61
00:02:48,680 --> 00:02:51,000
Speaker 1: but other number is actually that bad. So one kilo

62
00:02:51,080 --> 00:02:54,440
Speaker 1: block of mild cheddar was up from ten dollars twelve

63
00:02:54,919 --> 00:02:59,720
Speaker 1: to This was December twenty twenty three versus December betweeny

64
00:02:59,720 --> 00:03:03,040
Speaker 1: twenty four, so chet it from ten dollars twelve to

65
00:03:03,080 --> 00:03:07,960
Speaker 1: eleven dollars and one cent, butter from four dollars forty

66
00:03:08,000 --> 00:03:11,320
Speaker 1: eight to six dollars sixty six, and yogat a six

67
00:03:11,360 --> 00:03:14,960
Speaker 1: pack of yogat from seven dollars sixty nine to seven

68
00:03:15,000 --> 00:03:17,720
Speaker 1: dollars seventy four. I mean, is that is that is,

69
00:03:17,919 --> 00:03:20,239
Speaker 1: you know, when you consider the price of everything else,

70
00:03:20,280 --> 00:03:22,520
Speaker 1: that win done well.

71
00:03:22,600 --> 00:03:25,079
Speaker 2: And that's so I think the important comparison. You're right

72
00:03:25,080 --> 00:03:28,040
Speaker 2: that in general, for most products in the dairy space,

73
00:03:28,080 --> 00:03:31,320
Speaker 2: they haven't increased over the sort of a longer period

74
00:03:31,320 --> 00:03:35,560
Speaker 2: of time as much as inflation more generally has pitched up.

75
00:03:35,600 --> 00:03:37,960
Speaker 2: Now that's of course cold comfort when people are going here,

76
00:03:38,000 --> 00:03:40,360
Speaker 2: But I'm still paying more for my bottle of milk,

77
00:03:40,400 --> 00:03:43,120
Speaker 2: my butter, my cheese and everything else. And of course

78
00:03:43,120 --> 00:03:45,640
Speaker 2: there's a lot of variation in those prices. You'll get

79
00:03:45,640 --> 00:03:48,320
Speaker 2: some brands that cost more or less, You'll get different

80
00:03:48,320 --> 00:03:51,240
Speaker 2: parts of the country with different prices. So I think,

81
00:03:51,280 --> 00:03:53,360
Speaker 2: you know, for households, it still doesn't I mean, even

82
00:03:53,400 --> 00:03:56,760
Speaker 2: if you make a good economic explanation, it doesn't make

83
00:03:56,840 --> 00:03:59,800
Speaker 2: going and doing your shopping any easier. But I think here,

84
00:03:59,800 --> 00:04:03,960
Speaker 2: there there are clear global competition pieces that have come through,

85
00:04:04,520 --> 00:04:06,920
Speaker 2: and looking through some of those prices, it seems clear

86
00:04:06,920 --> 00:04:09,520
Speaker 2: that you should shop around a bit if you're able to.

87
00:04:09,600 --> 00:04:11,480
Speaker 2: If you're doing a huge amount of baking and you

88
00:04:11,560 --> 00:04:13,560
Speaker 2: need a whole lot of butter all at once, you

89
00:04:13,560 --> 00:04:15,720
Speaker 2: know it is probably worth checking out when the deals

90
00:04:15,720 --> 00:04:18,320
Speaker 2: are coming through rather than just buying whatever's first there,

91
00:04:18,480 --> 00:04:21,159
Speaker 2: because there are there is quite a bit of variation

92
00:04:21,279 --> 00:04:21,919
Speaker 2: around the traps.

93
00:04:22,000 --> 00:04:24,800
Speaker 1: Yeah, good on your Brad. Brad Olson, Informtrics Principal Economist,

94
00:04:24,800 --> 00:04:26,920
Speaker 1: thanks so much for your time this morning. For more

95
00:04:27,000 --> 00:04:30,080
Speaker 1: from the Mic Asking Breakfast, listen live to news talks

96
00:04:30,120 --> 00:04:33,320
Speaker 1: it'd be from six am weekdays, or follow the podcast

97
00:04:33,320 --> 00:04:34,160
Speaker 1: on iHeartRadio