Media personalities like Ryan Bridge and industry apologists such as Dr Jacqueline Rowarth have been peddling this economic fairy tale with all the enthusiasm of a Fonterra shareholder.
Their argument essentially boils down to this: high butter prices mean more export revenue, which creates jobs and drives economic growth. Bridge claims that because New Zealand exports 441 tonnes of butter compared to Australia's 9.4 tonnes, we're simply "more susceptible to international market prices."
Meanwhile, Rowarth touts the magical multiplier effect, claiming every dairy dollar generates seven times its value in the economy and creates over eight full-time equivalent positions.
But scratch beneath the surface of these cherry-picked statistics, and you'll find an economic model that's fundamentally broken for ordinary New Zealanders.
Yesterday, the NZ Herald reported:
Dairy exports vital for NZ economy despite butter price concerns: Dr Jacqueline Rowarth
A considerable amount of time and energy is spent marketing and positioning to achieve the best price possible for the product.
The money keeps people in employment, funds repairs, maintenance and infrastructure development, and also funds research into new products.
The bulk of the export income goes to the dairy farmers so that they, too, can employ people and create vibrant businesses, while also funding farm research through their levy contribution to industry good bodies such as DairyNZ and Beef + Lamb NZ.
Research shows that economic changes since the 1980s, combined with global dairy demand, have created an environment where a significant proportion of New Zealanders now experience financial difficulty purchasing basic dairy products like milk.
When butter prices surge 65.3% in twelve months, jumping from $4.48 to $6.67 for a 500-gram block, we're witnessing the export success model pricing out locals from their own food production.
The income streams give everybody more choice, including the Government through tax-take investment.
Every
dairy dollar created by New Zealand cows and sold offshore generates
over seven times the value in New Zealand and increases employment by
over eight Full Time Equivalent positions.
The $27 billion in export dollars is $5400 for every New Zealander, which multiplied by seven is almost $40,000.
The claimed seven-times multiplier effect that Rowarth champions lacks any credible verification and sounds like more trickle down economics rubbish! If dairy's $18.6 billion export value truly generated seven times its worth, it would represent over 35% of New Zealand's GDP. It obviously doesn't. In reality, dairy represents 5.3% of nominal GDP and 23% of total export values, which is somewhat impressive, but hardly the economic miracle being portrayed.
What Bridge and Rowarth conveniently ignore is the regressive nature of high food prices. A 65% butter price increase represents a devastating blow to lower-income households who spend a higher percentage of their income on food. We're essentially witnessing a wealth transfer from consumers, often those who can least afford it, to dairy industry stakeholders and shareholders.
Last month, Newztalk ZB reported:
Ryan Bridge: Why expensive butter prices are actually a good thing
1) We export a hell of a lot more to the world than the Aussies do.
In 2023, they exported 9.4 tonnes. We exported 441 tonnes. They exported 2% of the quantity we did.
That means our price is more susceptible to the international market price. We export most of our butter, we pay the international price.
Australia on the other hand, eats a lot more of its own and exports less.
This is good and bad. It mean we pay the trade price, yes, but it also means when the price is high, as it has been lately, our largest company Fonterra does well. Our farmers do well. They spend money here and drive growth in our economy which we all benefit from.
The environmental costs of this export-obsessed model are equally damning and largely subsidised by the public. Since 1990, nitrogen fertiliser use, often sourced from questionable providers, has increased by 629%, from 62,000 to 452,000 tonnes annually. The result? Two-thirds of monitored rivers and streams now suffer from impaired ecological health. About 85% of waterways in farming catchments are now polluted, with some areas seeing sensitive species disappearing entirely because of pollution from dairy farms.
The true cost of producing a litre of milk can reach up to 11,000 litres of water when accounting for nitrate pollution impacts. Meanwhile, 40% of New Zealanders rely on groundwater for drinking water, with nitrate contamination worsening in many aquifers. These environmental and health costs, from water treatment to ecosystem restoration to cancer treatments (consumption of nitrate in drinking water is associated with several cancers), are borne by New Zealand taxpayers, not the dairy industry.
The employment argument also falls apart under scrutiny when we consider opportunity costs. Could the same land, capital, and labour create more jobs or higher wages in other sectors? The industry presents their employment figures without comparative analysis, ignoring what economists call the "opportunity cost" of resources tied up in dairy production.
How do we stage an intervention? Someone posted today that NZ butter is as low as $3 in some paces in Australia. Can we organise a butter protest? 😅😭 pic.twitter.com/S5ehKVsTrc
— Don't be a dick 🐦 (@fizzanddumpling) April 28, 2025
Perhaps most galling is the disconnect between domestic and export markets. While New Zealand dairy products command premium prices internationally for being "grass-fed" and "sustainable," Kiwi families are forced to pay international prices for locally produced essentials. This suggests fundamental market failure where domestic consumers subsidise export profits.
The reality is that the dairy industry's argument represents a classic case of privatising profits while socialising costs. Export success benefits shareholders and industry stakeholders while ordinary New Zealanders face food insecurity and environmental degradation. A truly beneficial economic model would balance export success with domestic affordability, ensuring New Zealanders aren't priced out of their own country's food production.
Bridge's comparison with Australian gas contracts is particularly revealing, acknowledging that producers often prioritise large international contracts over domestic needs. This isn't a bug in the system; it's a feature. The question is whether New Zealand's economic model should prioritise export revenue over the basic nutritional needs of its own citizens.The dairy industry's propaganda machine wants us to believe that expensive butter is a sign of economic success. In reality, it's a symptom of an economic model that has lost sight of its primary purpose: serving the people of New Zealand, not just the balance sheets of multinational corporations.
