Fonterra to Lower its NZ Dairy Prices

While global dairy commodity prices remain well above traditional levels they are softening and this will flow through to the prices it charges its customers for products such as cheese and butter.

03/10/08 Fonterra Brands New Zealand, which sells about half the dairy products in New Zealand, says that while global dairy commodity prices remain well above traditional levels they are softening and this will flow through to the prices it charges its customers for products such as cheese and butter.

“While we do not set retail prices, the prices we charge our customers will fall and we expect that to flow through to the shopping aisle. This is good news for New Zealand households,” said Fonterra Brands Managing Director Peter McClure.

Mr. McClure expects New Zealand shoppers will start to see lower prices before Christmas.

“We have product in inventory such as cheese that was bought six months ago when its commodity price was more than double historical averages. So it might take some time for our prices to drop in some categories, the overall message however is they will drop,” he says.

“We can’t yet put a figure on the size of the price drops because we don’t know when the commodity prices will level off and there are other important factors such as US dollar exchange rate.”

Mr. McClure says Fonterra Brands New Zealand has and continues to subsidise the New Zealand dairy market.

“We never passed on the full amount of the commodity price rises to our customers over the last 18 months, and we continue to feel the pinch in our margins.”