You’d butter believe it: Why your morning toast is a luxury

Sunday, 8 June 2025

Lock up your butter, it’s worth as much as copper.

Kevin Norquay is a senior writer based in Wellington, covering social justice, technology and community change.

EXPLAINER: Feeling as if butter doesn’t just look like gold, it’s starting to cost about the same? You’re not wrong.

Last month, butter hit an all-time high at the Global Dairy Trade auction - just over $NZ13,000 a tonne. And you will notice it when you hit the supermarket aisles.

What else costs that much a tonne? Not gold, but copper has been fluctuating around that mark in 2025.

Lithium - used in EV batteries and in cellphones and other electronic devices - can hit $13,000 a tonne, though battery-grade lithium carbonate has been higher.

In April 2024, 500g of salted butter was $4.49, Statistics New Zealand said. By April this year it had hit $7.42, an increase of 65% in 12 months.

On May 2, New World was selling Anchor 500g butter for $12.49. This week Woolworths had it on special for $9.90 (was $11.00).

What the hell? New Zealand makes the stuff, off the back of one of the most efficient dairy industries in the world. So why are we paying so much, ASB economist Nick Tuffley is asked.

In short, most of our dairy produce (95%) is sold overseas and we don’t get mates’ rates, he says. Dairy prices globally are driven by changes in dairy production, and demand has been strengthening over the past year.

“Although demand growth from China - our biggest dairy export market - has grown slowly, we have seen strong demand for dairy imports from wider Asia, Latin America and the Middle East,” Tuffley says.

And blame inflation. It’s been high for an extended period so it is more expensive to run farms - that has risen 25% in the space of a few years, he says.

So up goes the global break-even cost of making butter, and up goes the price of buying it, at a time when our money is spread more thinly.

It’s cyclical though, right?

Why are we paying so much for butter when we are so good at making it?

“Agricultural product prices do go through cycles,” Tuffley says. Even weather changes can influence production. So do high prices, meaning farmers produce more to take advantage, which means supply is better, and the cost to the consumer falls.

And then there is a but.

“However, in NZ there is a growing focus on environmental considerations - production increases here are likely to increasingly come from greater on-farm efficiency rather than the large herd increases NZ experienced a decade or more ago.”

So should Kiwis expect cheaper dairy products because our agricultural sector is good at making them? That would be no, Tuffley says. Would you work for less to help out your compatriots?

“Getting cheaper products just because we make them means either asking farmers to cut their incomes on our behalf or get the Government to subside our purchase costs,” he says.

“For farmers to sell locally at a lower price than what their product is worth on international markets means they are not able to maximise the incomes they make from their work and the investment risk that they take.

“If they didn’t, farming may not be as profitable and undermine the viability of the industry. And if we get the Government to subsidise dairy purchases that comes at a cost of higher taxes (reducing our take-home pay) or through foregone spending on other areas such as health or education.

A scone for $8 or more? That's soon the reality, as The Press reporter Carly Gooch explains.

“There is a cost to artificially lowering prices.” Bugger.

Countries that make cars or mobile phones don’t sell those products for less in their domestic markets. The focus is on maximising their profitability in all the markets they sell in.

And when butter goes up, that can inflate the price of alternatives, such as margarine.

“It could potentially, if people decide to switch away from butter and buy margarine in enough quantities that it ups production costs for margarine – or encourages retailers to respond by lifting the price of alternatives,” Tuffley says.

When all but 5% of our dairy produce is sold in a global market, higher prices do benefit us all.

Export prices have been increasing since March 2024 and are now 17% higher than they were a year ago, Stats NZ says. Butter prices are 38% higher than in the March 2024 quarter.

“NZ benefits. Dairy is a key export earnings for NZ, and high prices mean greater earnings and profitability for the sector,” Tuffley says.

Farmers spend that in rural communities up and down the country, they invest in and maintain their farms, and spend on themselves.

So communities, tractor dealerships, fencing contractors, builders, retail shops and many others do well.

“When our agricultural export sectors are doing well, NZ’s economy benefits – particularly outside of the urban areas.”

Let’s toast to that - go easy on the butter, though.

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