24 Jul 2011

Butter and cheese prices to drop, but not milk

5:01 am on 24 July 2011

Fonterra is to drop the price of butter and cheese next month, but not the price of milk.

The dairy co-operative froze the wholesale price of fresh milk in February, amid consumer complaints about the rapidly increasing cost.

It will drop butter and cheese prices in August in line with drops in international prices

But at this stage, Fonterra has no plans to change the price of fresh milk.

Brands managing director Peter McClure says that if international milk prices also drop significantly in the future, it will pass the lower price onto New Zealand consumers.

Earlier, Fonterra said domestic dairy prices in New Zealand have increased less than global prices for dairy products, largely because of the growth of supermarket home brands, sold at a discount.

It said about 70% of domestic fresh milk sales in New Zealand are now home brands

Meanwhile, an agency dealing with struggling families says Fonterra's decision to cut the prices of some dairy products is unlikely to help those who need it the most.

The director of Wellington Downtown Community Ministry, Stephanie McIntyre, says poor families have already decided that cheese and butter are right outside of their affordability range and they're already opting to use cheaper substitute spreads.

She also says milk powder is the most sought-after item when people approch the Ministry for food assistance.