Food & Climate
The butter prices crisis in New Zealand has reached Parliament, where the president of Fonterra faced questioning about the increase in dairy prices in general, and butter in particular, on Tuesday, July 22, 2025.
“Fonterra” is a New Zealand-based cooperative owned by 10,000 farmers. For more than a century, it has been collecting and using the bounty of milk, and today share it with more than 140 countries around the world.
Fonterra chief executive Miles Hurrell had several meetings with various political parties on Tuesday, including National, ACT, and Labor, according to a report seen by “Food & Climate” platform.
It included a sit-down conversation with Finance Minister Nicola Willis who was keen to probe the dairy boss about the cost of butter to consumers.
The butter prices have skyrocketed by more than 60% in the last year (2024), currently sitting between $8 and $11 for a 500g block, while The price of a block of butter is now 120% higher than it was 10 years ago, and increases in dairy prices in general helped pull up food prices in June, Stats NZ says.
Butter prices raised public eyebrows
The issue of butter prices has raised eyebrows amongst the public who have been dismayed at the cost of butter in local supermarkets.
One man in Auckland said, “You see everything is going up, look at the butter prices and everywhere.”
Another woman said, “Oh my God, butter, it’s like double what it used to be.”
Another consumer asked what was behind the increase. “Butter, all the basics, why does it have to cost this much in New Zealand?”
The issue also sparked a sharp interaction in Parliament’s debating chamber between the two major party leaders, Labor and National.
“How many blocks of butter can he buy for the $60 a week he claims to spend on groceries?” Opposition leader Chris Hipkins asked Prime Minister Christopher Luxon, according to “1News“.

Butter has become a symbol of a broader problem: a country built on dairy exports finding its own products increasingly unaffordable, according to “The Press“.
The reasons aren’t simple. Butter pricing reflects a complex mix of market dynamics and policy settings, not the actions of any one player. Responsibility is shared, and the problem isn’t easy to fix.
At the heart of the matter is how New Zealand’s dairy sector is structured, and why that means local consumers are often at the mercy of global markets.
New Zealand produces far more dairy than it consumes. Around 95% of the country’s milk and dairy products, including butter, are exported. That export dominance determines how domestic prices are set.
Economist Shamubeel Eaqub explains: “The reason we make lots and lots of milk in New Zealand is because we export it. And so, because that’s our major market… that tends to be the price system.”
“We’re just bloody good at making milk,” he says, “which means we’ve built an industry around exports.”
This model is called export parity pricing. It means the price Kiwis pay for butter reflects what it could earn overseas, rather than the local cost of production.
And when global prices rise, domestic prices typically follow.
Brief lull
Butter prices have rebounded after a brief lull, pushing the world food index higher in April, with some commodities.
The benchmark measure of world food commodity prices increased in April, driven by higher quotations for major cereals, meat and dairy products, the Food and Agriculture Organization of the United Nations (FAO) reported this month.
Butter production had been hit by numerous crises since the last quarter of 2023, causing prices to spike to historic highs. They remained stable high for 14 months until December 2024, when they declined for the first time.
Across the 27-member European Union, the price of butter rose 19% on average from October 2023 to October 2024, including by 49% in Slovakia, and 40% in Germany and the Czech Republic, according to figures provided to The Associated Press by the EU’s executive arm.
The increase is the result of a global shortage of milk caused by declining production, including in the United States and New Zealand, one of the world’s largest butter exporters, according to economist Mariusz Dziwulski, a food and agricultural market analyst at PKO Bank Polski in Warsaw.

The FAO says the reason for the rise in butter prices in April was low stocks in Europe, but there are many reasons behind the rise in butter prices over a period of nearly two years.
Agnieszka Maliszewska, the director of the Polish Chamber of Milk, thinks domestic, EU-specific and global issues explain butter inflation. She argues that the primary cause is a shortage of milk fat due to dairy farmers shutting down their enterprises across Europe because of slim profit markets and hard work.
She and others also cite higher energy costs from Russia’s war in Ukraine as impacting milk production.
Economist Dziwulski, however, thinks droughts may be a factor in reducing production. Falling milk prices last year also discouraged investments and pushed dairy producers in the EU to make more cheese, which offered better profitability, he said.
An outbreak of bluetongue disease, an insect-borne viral disease that is harmless to humans but can be fatal for sheep, cows and goats, may also played a role.