Food Price Rises Prove Difficult to Pin Down

By COLLETT, Geoff

Grocery price surveys are notoriously tricky exercises, for both the ever- shifting sands they are built on (widely fluctuating prices, tricky comparisons between brands, constant discounting, loyalty deals) and the extreme prickliness of supermarkets towards drawing attention to price differences.

Even Consumer New Zealand has in the past faced threats of legal action over its regular price surveys (not to mention supermarkets temporarily reducing prices to coincide with the institute’s surveys). Still, the surveyors persist.

Consumer included Nelson for the first time in its most recent supermarket survey, conducted in March.

This compared the prices of 40 top- selling grocery lines, such as wine, bread, milk, fizzy drink, chocolate and cat food, but no fresh meat, fruit or vegetables. Its findings were: Pak ‘n Save Richmond was the cheapest for the selected lines ($130), followed by New World Stoke ($133); Countdown in St Vincent St ($139); Fresh Choice Richmond ($139); and Woolworths in Halifax St ($140). Nelson supermarkets overall were cheaper than Christchurch’s and Dunedin’s, but dearer than any of the North Island centres surveyed.

The official word on prices is provided by Statistics New Zealand’s Food Price Index. It was the latest release of this, for March, that helped to fan the flames of unrest about the cost of living. Over the 12 months to March, cheese had gone up 44.2 percent, milk 21.7 percent, butter 82.2 percent, bread 12.2 percent, soft drinks 8.6 percent, and fruit and vegetables – which often fall in price, particularly over summer – by 3.1 percent (partly fuelled by tomatoes, up 79.9 percent, blamed on a difficult growing season).

It needs to be said that some – probably quite a lot – of individual products remain cheap or have increased by a comparatively trifling amount (rice is an example Destitute Gourmet Sophie Gray points to).

But nor do the official figures capture all the soaring prices – chicken, for example, has gone up something like 27 percent in the past year and eggs by 20 percent, according to the Poultry Industry Association, principally due to the rocketing price of feed grain on world markets.

The bad news is that such spikes are not aberrations, or even short-term. Both Alan Malcolmson, the general manager of retail for the Foodstuffs South Island supermarket chain, and Federated Farmers president Charlie Pedersen make the point that New Zealand has enjoyed a prolonged run of cheap food.

Both also point to the global forces behind the end of the run: even, to Pedersen’s mind, a fundamental shift in the supply-demand balance, where the world population is starting to put food production under pressure, so demand is starting to meet supply for the first time in decades.

Pedersen knows that his members – particularly in the dairy sector – are at risk of being cast as villains in the current environment. “There is a perception that dairy farmers in particular are creaming it,” he acknowledges.

But farmers know better than most that what goes up always comes down again, and Pedersen is entirely unapologetic about the contrast between the exceptional payouts due to dairy farmers this year and the pain and anger being felt at the other end of the supply chain.

Compare the price of a bottle of milk with a bottle of water, he challenges. “There’s a hell of a lot of effort and organisation goes into producing a bottle of milk, and it’s been taken for granted for far too long.”

Malcolmson is similarly dismissive of suggestions that supermarkets are part of the problem – the various conspiracy theories that they are taking advantage of high prices generally to keep their profit margins cranked up. After all, it seems to be working for the oil companies.

Rubbish, says Malcolmson. “It just doesn’t work like that.”

He doesn’t waiver from his line that it is all about global forces. His advice: unhappy shoppers have to grasp the reasons behind the pain. “I don’t see any relief to those increasing prices in the short term, that’s for real.”

(c) 2008 Nelson Mail, The. Provided by ProQuest Information and Learning. All rights Reserved.