The primary driver behind these sustained high prices is a significant and growing global demand for dairy fats and protein. This trend is particularly strong in key markets across China and Asia. Fonterra’s core strategy, as articulated by Hurrell, is to capitalize on this global demand to generate overseas revenue, which is then reinvested into the New Zealand economy. This export-led approach is viewed as a “good news story” for the country’s economic recovery.

Hurrell explained that roughly 80% of the retail price of a block of butter is determined by the international market. This metric is a crucial piece of data for anyone involved in dairy economics, highlighting how deeply integrated the New Zealand dairy sector is with global trade. The cooperative’s focus remains on maximizing returns from foreign buyers to benefit its members and the national economy.

The article also clarifies that Fonterra will not be implementing a two-tier pricing system or offering domestic discounts to alleviate the cost burden on local consumers. This stance is rooted in the belief that the cooperative’s primary responsibility is to its producers and the wider economy, which benefits from the foreign capital generated. It further states that the 5-10% margin on the butter price does not represent pure profit but covers costs for everyone in the supply chain.