Stupid comparisons

Andrea Fox reports:

Public anger at the fast-rising price of milk and other dairy products has led Agriculture Minister David Carter to seek a special report from his officials and dairy giant Fonterra to revisit its sums.

Mr Carter wanted to be assured there were no cosy “arrangements” and that legislation designed to rein in Fonterra’s domestic market power was working.

Peter McClure, managing director of Fonterra’s New Zealand operations, Fonterra Brands, said he would be “uncomfortable if prices moved up much more”. But he might be forced to raise them if export returns remained strong.

Mr McClure said milk represented “incredibly good value” – a two-litre bottle could still be cheaper than a cup of coffee – but Fonterra did not want to make milk unaffordable.

That’s a stupid comparison – comparing the cost of a raw good, with the cost of something you buy over the counter and is made up for you.

It’s like saying that ham is good value as the price of buying ham at the supermarket is less than the cost of buying a chicken roll at Subway.

The correct comparison for milk is how it compares to juice, soft drinks etc. A 3l keri juice is $5.71 and fresh up is $6,43.

Calci-trim milk is $6.49, and it used to be around $5.70 so has gone up a lot and is now more expensive than fruit juice and way more expensive than soft drinks.