No cheaper milk despite NZ FTA

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The Rakyat Post | 26 October 2015

No cheaper milk despite NZ FTA

Consumer prices of dairy products imported from New Zealand will most likely remain at the current level although the free trade agreement (FTA) between the southern country and Malaysia will fully kick off next year.

The New Zealand-Malaysia FTA was signed on Oct 26, 2009 and entered into force in 2010. The deal will be fully implemented come January next year.

While the deal involves zero import tariffs for New Zealand, the prices of dairy products are still very much dependent on supply and demand as well as global dairy prices and currency performance, explained Fonterra global chief executive Theo Spiering.

“Currently there’s a huge volatility on global dairy prices. For example, two and half years ago, the dairy price was US$2,500 (RM10,650) per tonne (of milk powder) then it went up to US$6,000 and fell to US$1,500.

“If we were to charge consumers based on global prices, they will then see huge prices changes – going up and down.

“So what we do is we go on a price level that is affordable to all consumers, then we follow the inflation in the country that the products are sold.”

Some of brands under the group are Anlene, Anmum, Chesdale and Fernleaf.

New Zealand and Malaysia have enjoyed trade worth over US$3 billion since 2009, said High Commissioner to Malaysia Dr John Subritzky. He added that Malaysia is the top 10 export market for New Zealand.

Meanwhile, Fonterra global director Patrice Wynen said the company has invested RM3 million to open a new-shared service centre in Malaysia to enable it to focus on expansion into key growth markets in Asia and China.

He said the centre is the co-operative’s first outside New Zealand and its opening highlights the importance of the region to its global strategy.

“Malaysia offers a great business environment, a talented multi-cultural workforce and strong local infrastructure.

“Our long history in Malaysia, the country’s close proximity to Fonterra’s growing markets in Asia and the Middle East and its pro-business practices made Malaysia a natural choice for this shared service centre.”

source: The Rakyat Post