New Zealand milk standoff - are we being ripped off?

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New Zealanders are paying too much for milk despite the international price falling and farmers getting less for their product, Labour says.

Milk being poured into glass

Source: Seven Sharp

Consumer Affairs spokesperson David Shearer says Statistics NZ figures showed the average price for two litres of milk went from $3.19 in May 2013 to $3.45 in May this year, a rise of around eight per cent.

That compared to a price of $2.47 in Australia and $1.90 in the UK.

"Someone is making money along the line and it is hurting New Zealand consumers," Mr Shearer told Radio NZ today.

"Obviously New Zealanders are being ripped off. The milk price internationally has halved. Farmers' milk prices have halved and yet our milk prices keep on going up."

He called for an investigation into why Kiwis are paying so much for milk.

However, Prime Minister John Key said overseas markets were causing headaches for consumers in this country.

"A price war at the moment in the UK is causing that," he told TV3 this morning.

Food and Grocery Council head Katherine Rich said she has been following the discussion on milk prices, and is concerned with the overseas comparisons used.

"There has been such a feral price war between major supermarkets overseas, in the UK milk is losing money on every sale and dairy farmers are screaming," Ms Rich says,

The Government could take action, but would not be able to make businesses sell milk at a loss, which would flow on to farmers.

A Countdown spokesperson says they have sold their Homebrand milk at $3.19 for over a month.

In 2011 the Commerce Commission ruled out holding an inquiry into the price of milk, after consumer groups and the Green Party demanded an investigation.

They said Fonterra had an effective monopoly because at the time it collected over 90 per cent of milk produced.

Fonterra argued prices were set as part of a normal commercial process and were affected by global markets.

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