The great butter racket: How New Zealanders pay export prices for milk we produce
- Grant McLachlan - Column
- May 14
- 7 min read
A $0.80-per-100g American import has done what a year of inquiries, ministerial meetings and earnest journalism could not: it has exposed how thoroughly the New Zealand butter market is rigged against the consumer who pays for it. The 1News interview that prompted this column told the story of how it works — by accident.
A 500g block of butter cost the average New Zealander $2.97 in January 2015 and $4.49 in April 2024. By July 2025, the same block cost $8.60. Some brands cracked $11. That is a 60% jump in a single year — for a product made down the road from the supermarket selling it. Then, in May 2026, Foodstuffs slipped a pale block called Burtfield’s & Co into the Pak’nSave chiller at $0.80 per 100g, and a country that had been told for two years it was merely paying the global price discovered that the global price, for once, was on the shelf right beside its own.
The industry response was instructive. On 1News Breakfast, host Tova O’Brien interviewed Federated Farmers national dairy vice-chair Bex Green to ask why imported American butter was cheaper than the homegrown product. Federated Farmers is the dairy lobby. Every viewer knows this. The interview was therefore not an information exchange between curious host and informed source; it was the dairy industry being handed a microphone on the prime breakfast slot to explain why the price the public was paying was, in fact, the correct one.
Neither host nor guest had tried the product they were discussing. Green admitted as much. And the obvious question — why, in a country that produces about a third of the world’s internationally traded dairy, can American butter shipped 13,000 kilometres undercut the local block? — was never put with any force.
An interview that wasn’t
Green’s pitch, unchallenged, was that New Zealand butter is “premium” because grass-fed cows produce beta-carotene-rich yellow butter. The science is correct; the conclusion is marketing. Colour reflects feed, not quality, and Consumer NZ’s blind taste test — published the same week as the Breakfast interview — demonstrated the point devastatingly. The Warehouse’s Market Kitchen, made in New Zealand, finished last at 2.5 out of 5. The derided American import scored 2.8. Premium darling Lewis Road Creamery managed 3 out of 5, with several tasters comparing it to margarine. The top-scoring block, Westgold at 4.2, comes from a co-operative owned since 2019 by Chinese conglomerate Yili.
So much for Kiwi-owned premium.
Green also suggested New Zealand should introduce subsidies to bring butter prices down. Read that twice. The same industry banking record export earnings is asking taxpayers to subsidise its production so consumers can afford its product. O’Brien did not press the point. She did not mention that the imported butter is brought in by Dairyworks, a Christchurch company owned by Synlait — making the “foreign versus local” framing of the entire segment a fiction. She did not mention that Foodstuffs labels the product as a US import on the wrapper, contrary to Green’s vague hint that consumers were being misled.
The New Zealand Broadcasting Standards Authority codebook still requires — for now — balance, accuracy and fairness on controversial issues of public importance. Cost of living counts.
And it wasn’t just 1News
NZME’s stable produced three pieces of content on the same Burtfield’s story in roughly a week. Cherie Howie’s NZ Herald news write-up did better than the Breakfast segment in one important respect — it correctly named Dairyworks and Synlait Milk as the importer, rather than leaving “American butter” to do the rhetorical work. But Fonterra was never mentioned. Willis was never mentioned. The Commerce Commission was never mentioned. The structural story was missing in the same shape it was missing on the other channel.
Herald NOW’s Ryan Bridge TODAY ran a blind taste test the same morning between Labour’s Willie Jackson and National’s Paul Goldsmith — cost-of-living crisis converted into partisan light entertainment, with eye masks. Goldsmith, the minister whose government must answer for the dairy and grocery sectors, failed to identify which butter was which. The host’s own Friday panel later sanded that off to “he seemed to enjoy it” and introduced the segment with the line that this was “a Kiwi company that’s imported the butter from America, basically wrapped it in paper”.
A panellist suggested American butter was suspect because Americans eat orange cheese. The host called the product “saggy”. Dairyworks was not named. Synlait was not named. Fonterra was not named. The New Zealand butter price was not named. The Consumer NZ blind test — published that week, with one local butter scoring below the imported one — was not named.
A viewer watching NZME’s flagship video product across a week of butter coverage came away knowing less than a single afternoon with the Commerce Commission’s grocery report would have taught them.
Why the price is what it is
The mechanics are not mysterious. Fonterra prices its dairy to New Zealand processors and retailers at the international benchmark set by the fortnightly Global Dairy Trade auction. Roughly 80% of the retail price, per Fonterra chief executive Miles Hurrell, is set by global demand — driven this cycle by Chinese and Southeast Asian consumers being told butter is good for them. The remaining 20% is divided between processor margin, supermarket margin, distribution and GST. Hurrell’s own description is that supermarkets keep 5–10% of the final shelf price. On an $8.60 block, that is somewhere between 43 cents and 86 cents.
The supermarket end is hardly innocent. The Commerce Commission’s 2022 market study found Foodstuffs and Woolworths NZ extract approximately $1 million in excess profit per day — a return on capital of 12.9% against a competitive norm of 5.5%. Together the duopoly holds around 82% of the grocery market. The Government’s response has been a Grocery Commissioner with a $5 million-cap fine sheet, a “fast-track” pathway for new entrants, and, at the time of writing, no third major chain in sight.
But blaming retailers alone is convenient cover. On Fonterra’s own numbers, between $7 and $8 of an $8.60 block leaves the supermarket’s hands and goes upstream.
Fonterra itself reported a $1.158 billion third-quarter profit in May 2025, pitched its 2025/26 farmgate milk price at $8–$11 per kg of milk solids, and pays its chief executive roughly $6 million a year. Five months later it sold Mainland, Anchor and the rest of its consumer brands portfolio to French dairy giant Lactalis for $3.845 billion — with a long-term raw-milk supply deal attached. The co-operative that built itself on Kiwi consumers has decided those Kiwi consumers are not worth retaining as anything more than a captive supply chain. A capital return of $2 a share is on the way to farmer shareholders. Approximately $400,000 per farm. None of it to the people paying $11 for the block.
The minister with the unmentioned résumé
Public anger forced the Finance Minister to act in July 2025. Nicola Willis met Hurrell at Parliament, then emerged to characterise the meeting as “constructive” and conclude that consumers were “not getting a raw deal”. Her prescription was more supermarket competition — a deflection towards the only player in the chain that takes the smallest slice.
What the bulk of the coverage either buried or omitted is that Willis worked for Fonterra from 2012 to 2017. She was hired as a government-relations operator, was promoted to General Manager of Stakeholder Management, then to Director of Global Stakeholder Affairs with responsibility for Fonterra’s trade strategy, and finished as General Manager of Nutrient Management before resigning to seek a National Party nomination. The trade publication Provoke profiled her in 2016 as Fonterra’s public-affairs replacement for Kerry Underhill after the botulism crisis and the Chinese price collapse — in plain English, she was the co-operative’s chief lobbyist. Her job for five years was to make government go easier on Fonterra.
The NZ Herald’s coverage of the Willis–Hurrell meeting noted her Fonterra past in a single line. RNZ included it. 1News’s televised report mentioned she “previously worked as a manager at Fonterra” — a description so soft it could mean she ran the staff cafeteria. None of them disclosed that her specific portfolio was government relations and trade strategy: precisely the function that exists to ensure ministers in her current chair say exactly what she said. That a finance minister whose entire commercial career was spent persuading politicians not to interfere with Fonterra concludes, after meeting Fonterra, that no intervention is warranted is not a coincidence. It is the system working as designed.
Why nothing has changed, and why nothing will
Australia’s political class faced down its supermarket duopoly with a Senate inquiry, an ACCC price-gouging investigation and Federal Court proceedings against both major chains. New Zealand’s response has been three reports, one Grocery Commissioner, a Fast-track Approvals Amendment Bill for hypothetical new entrants, and a finance minister telling Parliament the price of butter is “good news” for the export economy.
Federated Farmers told the same audience that what New Zealand really needs is to subsidise the production whose record prices are the source of the problem. The Commerce Commission’s 2025 report noted retail grocery prices were rising again and “remain higher than the OECD average”. The official position is that this is fine.
What was needed from 1News Breakfast on 13 May was not a chat with the dairy lobby. It was a single, basic question put to anyone with a stake: if 80% of the price is global demand and 5–10% is retail margin, where does the rest go, and why did it triple between 2007 and 2025? On the day that question gets a public answer, the racket ends. Until then, New Zealanders will continue to pay the world price for a product they fund, produce and process, and watch their finance minister — a former Fonterra lobbyist — explain that this is, in fact, a good thing.
The American butter on the Pak’nSave shelf is not the scandal. The scandal is that it took a $0.80-per-100g block of “pale” import to remind a country that it has been quietly priced out of its own kitchen.
