The call yesterday by the Greens for Fonterra to drop domestic prices shows how voodoo their economic views are. It also shows that they don't understand the fundamentals of the Fonterra model. Fonterra and the Dairy Board before it have been subsidising the domestic market for years. This has been made possible by the quota arrangements in Europe that in normal times deliver up to three times the world price. The "rent" from these quotas goes to Fonterra.
Fonterra's spokesperson last night on ONE News confirmed that Fonterra is subsidising the NZ market. He also reminded viewers that New Zealand only represents 4% of Fonterra sales. If the type of policy the Greens want is implemented we would not be surprised if Fonterra diverted that 4% offshore. Then it would be interesting to see what our dairy prices look like. We know what our supermarket shelves would look like. No butter, just like Japan right now.
How many anti-dairy statements are the Greens making each week? It would be an interesting analysis. Why? Because dairy is saving our economic bacon.
