The butter meeting heard round the country

Tuesday, 22 July 2025

Finance Minister Nicola Willis is set to meet with Fonterra boss Miles Hurrell on Tuesday night, in what has become a highly anticipated meeting as she seeks answers as to why butter costs so much in this country.

“I think we all understand that the main component of the price of a block of butter is the international dairy price,” Willis, who used to work for Fonterra, said on Tuesday morning.

“What we also understand is that some discretion is then applied by businesses about the margin that they charge for their wholesale product, and then a decision is made by supermarkets about the margin they put on top.

“I’m interested in Fonterra’s perspective about what those supermarket margins look like in New Zealand compared to, say, Australia or other countries that they sell their products in, and what they think is going into that price point in New Zealand, and why, in some cases, it varies in Australia.”

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She said Fonterra was very transparent about what it paid for a bucket of milk, but “what is less clear to all of us is how that then translates into the price of a block of butter, and what the components of that are.

“I think it’s useful for Fonterra, in their own words, from their own perspective, to describe what they see as the factors, and to give a view on whether there are any parts of that chain where more downward pressure could be put, because what we’re talking about here is at the margin, you know, 10 or 20c. But 10 or 20c really matters when you’re a Kiwi family at the supermarket checkout.”

Because most of New Zealand’s dairy is exported overseas, New Zealanders pay the same going rate. Dairy was also particularly in demand in some global quarters, like Asia, Latin America and the Middle East, which had driven up prices. Inflation also hasn’t helped.

New figures show food prices rose 4.6% in 12 months to June this year, with Stats NZ blaming dairy products as the main driver. The average cost of butter was $8.60 per 500g, according to Stats, a 46.5% annual increase. Milk and cheese had also climbed.

Some supermarkets have priced 500g blocks higher - with prices topping $10-$11. The Post previously reported one New World was selling an Anchor block for $12.49. But Costco, the global grocery behemoth that has set up shop in Auckland, was selling a 500g block for less than $10, drawing crowds.

Costco’s prices have captured the attention of Willis.

“Now, there have been those who think it’s an incredible insight to say, well that’s because they’re loss leading on that product,” she said on Tuesday, “Well yes they are. Why are they doing that? Well I’d suggest it’s because they’re competing for customers. And I do want to see more supermarkets in New Zealand feeling they need to compete for customers.”

Labour leader Chris Hipkins said the cost of butter was “very high” but queried “where’s the fix?”

“And the fact that, you know, there is admittedly anecdotal evidence that people can buy New Zealand butter in an international supermarket cheaper than you can buy it at a supermarket at home, suggests there’s something wrong with that market.”

Hipkins admitted he didn’t consume butter himself.

“I use margarine, low fat margarine. How do you think I managed to preserve this physique?”

Willis said other elements of the cost of food were on her radar, including supermarket competition, and wages. She also rebuffed suggestions she had “promoted” the meeting with Hurrell.

“I mentioned that I would be catching up with Fonterra in the coming days, and it’s been a matter of considerable focus, perhaps outsized to the nature of the meeting, in that I meet regularly with a number of entities … in this case, as a courtesy, I had alerted Fonterra that butter pricing, retail pricing, is one of the issues I wish to discuss.”