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The high price of milk. Implications for health inequality


Friday 19 June 2009 11:05am

Researchers at the University of Otago Wellington say that the high price of milk and other dairy products over recent years is detrimental to the health of children and has contributed to greater health inequalities in New Zealand.

In a wide ranging case study published in Globalisation and Health Dr Louise Signal and Moira Smith, from the Department of Public Health at the University, have examined the health impacts of deregulation of the market for milk since the 1980s, and the impact on the nation's health.

They say it is clear from a series of legislative changes that deregulation of the milk market since the 1980s has significantly reduced accessibility and affordability of milk products for many low income families and their children.

"What we have seen is a relatively rapid increase in the price of milk, with trade being the main priority of successive Governments since the 1990s, rather than the provision of milk to every household at an affordable price," says Moira Smith. "It means that milk, a basic nutritional product, fundamental to children's health, is often outside the reach of low-income families."

The researchers say that despite payouts to farmers falling from around $7 per kilogram of milk solids to an expected $5.20kg this year, the retail price for two litres of milk ($3.21) is the same as a year ago when adjusted for the CPI (see figures at end of release). Meanwhile the price of two litres of soft drink has stayed much the same at around $2.00 for 1.5 litres.

"Half a century ago governments supported the right of every child to cheap milk at home. Now this has been removed and serious health inequities have developed in New Zealand, particularly amongst lower socio-economic groups and Māori and Pacific peoples, 30% of whom fall into the lowest income group."

The researchers point to a series of actions by successive governments: the removal of government subsidies and control of the milk industry, the axing of price control, the application of GST on food, and the linkage of retail prices to international commodity prices (globalisation). This has resulted in an escalation in the price of milk for New Zealanders, in a country where 25% of export income is earned from dairying.

Now only 38% of children drink milk daily, and 34% weekly, with 17% not drinking it at all.

At the same time the removal of tariff barriers and the emphasis on international trade has resulted in a rapid increase in supply and consumption of unhealthy sugar-sweetened carbonated beverages (SSCBs) or 'fizzy drinks' from the early 1990s. Some reports indicate that milk consumption dropped by a third during the 1980s and 1990s.

"As everyone knows unhealthy fizzy drinks, which contribute to our high rates of obesity and tooth decay, are cheaper and more heavily advertised than milk," says Moira Smith. "Once again the highest consumption of these drinks is in low income groups."

The obvious solution according to the authors is for the Government to reconsider interventions to make milk more affordable for families.

  • Implement price control or subsidies and not rely on a relatively uncompetitive domestic market to constrain prices
  • Government assistance to low income families to ensure they can afford to buy healthy food
  • Milk as part of a 'Breakfast in Schools' programme in schools in low-income areas
  • Reduce or eliminate GST on healthy food choices such as milk and fresh, non-processed food. NZ is one of the few OECD countries which retains regressive GST on these products.

The University of Otago, Wellington researchers say that further work is needed to understand the reasons why people choose the food they do, particularly in low-income and at risk groups, in order to reduce health inequality and obesity in New Zealand.

"The issue of good nutrition needs to be taken much more seriously as one of the key determinants of health," says Dr Signal. "New Zealand's emphasis on trade and globalisation is now dictating the health of our children through the high cost of milk and milk products."

This research was funded by the University of Otago.

For further information contact

Dr Louise Signal
Department of Public Health
University of Otago, Wellington
Tel 64 4 385 5541 # 6477

Moira Smith
Department of Public Health
University of Otago, Wellington
Tel 64 4 476 6252

Month/Year Actual cost CPI adjusted to June 2009
Feb $2.64 $2.81
June $2.60 $2.73
Jan $3.13 $3.22
June $3.23 $3.22
Jan $3.31 $3.31
May $3.21 $3.21

Table 1. Actual and CPI adjusted (to June 2009) prices for 2 litres homogenised milk

Month/Year Milk (2l) Soft Drink (1.5l)
Feb $2.64 $1.89
Mar $2.61 $1.87
Apr $2.62 $1.86
May $2.62 $1.88
Jun $2.60 $1.92
Jul $2.86 $1.87
Aug $2.92 $1.82
Sep $2.90 $1.84
Oct $3.01 $1.90
Nov $3.09 $1.86
Dec $3.11 $1.85
Jan $3.13 $1.93
Feb $3.25 $1.97
Mar $3.25 $2.11
Apr $3.22 $1.95
May $3.25 $2.05
Jun $3.23 $2.02
Jul $3.19 $2.07
Aug $3.36 $2.05
Sep $3.37 $2.05
Oct $3.35 $2.02
Nov $3.35 $2.06
Dec $3.33 $1.96
Jan $3.31 $2.10
Feb $3.29 $2.18
Mar $3.27 $2.15
Apr $3.22 $2.06
May $3.21 $2.17

Table 2. Actual (unadjusted) cost of milk (2l) and soft drink (1.5l), Feb 2007 - May 2009


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