Statistics New Zealand said the monthly average price of a standard two litre bottle of homogenised milk was $3.45 in May after being in the range $3.61-$3.64 for the previous 12 months.
The private label or house brand prices are down as low as $3.09 but Anchor, Meadow Fresh and A2 branded milks, including enhanced or premium styles, are in the range $4.40 to $5.40.
Supermarket chains staff said they had recently passed on reductions averaging 6% in wholesale prices.
Labour’s consumer affairs spokesman David Shearer sparked a lively discussion in the media on domestic milk pricing in response to international market forces.
He asked why the local price range had risen over the past two years and cheaper milk was available in other countries.
NZ farmers had their farmgate milk price cut in half from one season to the next and somebody else in the chain was “creaming it”.
Dairy companies said it depended what time frame Shearer chose – if he had gone back four years he would have seen essentially the same level now as in 2011.
Fonterra Brands said it did not set retail pricing, which was set by the retailers themselves, and its wholesale prices were influenced by international prices, along with transport costs, energy, packaging, taxes and compliance costs.
“We want dairy nutrition to be affordable and are conscious that consumers’ disposable incomes don’t fluctuate as much as commodity prices,” co-operative affairs group director Miles Hurring said.
“Our pricing will continue to strike a balance between supporting affordable milk for Kiwi families and achieving sustainable returns on our products.
“On top of this we want milk to be easily available to children in schools, which is why Fonterra Milk for Schools is now in 73% of primary schools across the country and enjoyed by more than 170,000 children.”
Secondly, dairy companies and retailers did not pass on the full effects of the 2013-14 world dairy price bonanza, which saw farmers’ returns reach $9/kg milksolids, equal to 75c/litre.
At the time Fonterra chief executive Theo Spierings said he wanted to keep milk affordable for New Zealanders.
Fonterra and Goodman Fielder said they would not disclose wholesale pricing terms.
But it appears that contracts with retailers are long-term, over several years, probably with shorter-term price adjustments.
Fonterra Australia last year signed a 10-year supply agreement with Woolworths in Victoria for the private label liquid milks used as a loss leader by both it and Coles, at A$1/litre.
In NZ about half of all major dairy category sales – milk, butter and cheese – are private label.
