04-08-2023, 01:32 PM
Some interesting statistics here: https://oec.world/en/profile/country/nzl
Note that China is not only our biggest customer but also where the largest proportion of our imports come from. Also our exports are dominated by "Concentrated Milk" thereby making up the world's leading milk powder marketer with virtually half of it going to China.
The control that exists by being a supplier (or country's) biggest customer must also be recognised in light of those stat's. As an analogous example a known situation a few decades back was for Watties to coax farmers into trialling a small crop of garden peas. The returns were good so the farmer was tempted to increase the crop area in peas. Over a few seasons a sizeable portion of the farmer's income was being generated by peas and considerable investment had been made to boost production but then the price started reducing. Problem was that Watties were the only potential customer and they supplied the harvesting and processing plant and facilities for that crop in the province. The farmer was therefore stuck between a rock and a hard place so was pretty much 'owned' by Watties.
Today's news about Fonterra slashing their payout price to farmers due to a reduction of demand for milk powder by their Chinese market joined a few dots for me in respect of the two points above.
And of course Watties has long since ceased to be a NZ owner company, now owned by the US based Kraft Heinz conglomerate.
Note that China is not only our biggest customer but also where the largest proportion of our imports come from. Also our exports are dominated by "Concentrated Milk" thereby making up the world's leading milk powder marketer with virtually half of it going to China.
The control that exists by being a supplier (or country's) biggest customer must also be recognised in light of those stat's. As an analogous example a known situation a few decades back was for Watties to coax farmers into trialling a small crop of garden peas. The returns were good so the farmer was tempted to increase the crop area in peas. Over a few seasons a sizeable portion of the farmer's income was being generated by peas and considerable investment had been made to boost production but then the price started reducing. Problem was that Watties were the only potential customer and they supplied the harvesting and processing plant and facilities for that crop in the province. The farmer was therefore stuck between a rock and a hard place so was pretty much 'owned' by Watties.
Today's news about Fonterra slashing their payout price to farmers due to a reduction of demand for milk powder by their Chinese market joined a few dots for me in respect of the two points above.
And of course Watties has long since ceased to be a NZ owner company, now owned by the US based Kraft Heinz conglomerate.