Karl Dean: Federated Farmers Dairy Chair on the high costs of butter

We may have to get used to paying more for butter. 

Kiwi consumers are now consistently paying more than twice as much for butter as they were a decade ago, according to latest Stats NZ figures. 

Supermarkets and suppliers have been under pressure to lower prices. 

Federated Farmers Dairy Chair Karl Dean told Andrew Dickens there’s been a global trend towards consuming more butter, especially in the last five years, ramping up even further in the last twelve months. 

However, he says, what goes up normally comes down, which these bubbles normally do.  

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Episode Transcript

Speaker 1 (00:00):
Right, Oh, dairy prices around the globe are soaring, but
we are also footing the bill here in New Zealand
stats New Zealand food price figure show cheese is up
thirty percent on last year, butter prices are up forty
six point five percent for the year eight dollars sixty
the average price for a block. That's up five bucks
over the last decade. So Carl Dean is up early

(00:22):
for us, and that's no surprise because he is the
Dairy Group chair for Federated Farmers. Morning to your Carl, morning,
new gig for you, is it? Yeah?

Speaker 2 (00:32):
You have for three weeks in the role here, so
definitely given, slowly give in the hang of it.

Speaker 1 (00:37):
Now, this butter thing, I know it's good for farmers,
but it's bad for inflation. So what do you have
to say about it?

Speaker 2 (00:45):
So what I've had it it's sort of an accumulation
of effects. There seems to have been a global trend
towards more consumption abutter, especially in the last five years,
but especially in the last months. You know, there's been
just a huge We've just got a huge difference in

(01:06):
the price that we have now. Yeah, we normally have
a high payout.

Speaker 1 (01:11):
Well, the question we have a high payout.

Speaker 2 (01:14):
It's because of a very you know, the last time
we had high paouts because we had a good list
and the commodities across the board. And at the moment,
two of the commodities are standing out really well, which
is look fat and butter and yeah.

Speaker 1 (01:35):
You know, you know the question, the question that everybody
says when they go to the supermarket is Okay, we
understand the high international export prices. We think that's awesome.
Go the farmers. Yes, you are the backbone over our economy.
We know where our food is made. This is just great. However,
at the same time we make this stuff, and so
why do we have to pay the export price?

Speaker 2 (01:54):
Well, that's a very good question. But unfortunately for New
Zealand consumers, the trend for butter is a relatively new
one in terms of globally. You know, if you think
that fifteen years ago when a lot of New Zealand's
dairy boom happened. Twenty years ago, milk powder plants were

(02:17):
built because they were the most efficient to make a
exportable product of raw milk. A butter plant takes a
lot of time, a lot of money to build and develop,
and you would have to wonder whether globally we are
sharing the shortage of butter and cheese processing plants.

Speaker 1 (02:37):
Okay, so is this a butter bubble and if so,
if it is a butter bubble, will it burst or
can we get well, do we have to get used
to high butter prices going forward?

Speaker 2 (02:49):
Well, I would say, unfortunately for dairy farmers and probably
fortunately for consumers, what goes up will normally come back down.
If we look in the past, normally these bubbles do
go up and then they come down down. And the
question normally is as consumed myself, I still have to
buy butter. The question is do we see how quickly

(03:12):
do the supermarkets or the wholesaler's pass those drops on
because of the butterprice drops twenty we all want to
see that supermarket drop at least, you know, for theme
percent at least.

Speaker 1 (03:25):
Ye and we want to see it in quick time
as well. And should we warn farmers to be a
bit cautious because they've had a couple of windfalls in a row.
They can't expect this to be going forward consistently as well.
They have to make smart financial decisions, don't they.

Speaker 2 (03:41):
Yes, I mean, the current hats are really built on
our loan news on door at the moment, and literally,
when I look at the graphs right now, it is
literally due to butter and cheese and milk fat holding
up the payout. So if those two drop away, the
payout will drop rather quickly and we'll go back into

(04:04):
the eight dollar mark. So what goes eight dollars?

Speaker 1 (04:07):
And back on the eight dollars? Mate, we won them
back to the five dollars sixty PAMs, if you don't mind, I'm.

Speaker 2 (04:13):
Meaning, I'm meaning for the dairy payout.

Speaker 1 (04:16):
I go to, I go to.

Speaker 2 (04:17):
Yeah, when we were getting paid eight dollars, I think
battle was getting around the five dollar mark.

Speaker 1 (04:22):
That's right, That's right, all right, Carl, I thank you
so much for getting up earlier. Carl is the brand
new dairy chair for Federated Families. By the way.

Speaker 2 (04:30):
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