Milking Matters

 Read more Oily Rag articles by Frank and Muriel Newman

Politicians like milk, or so it would appear if the number of enquiries into its price is anything to go by! We have written a great deal about the price of milk and so have been taking an active interest in their theatrical fist thumping and cries of “rip-off” and “exploitation”.  The problem, some say, is that consumers are paying too much for their milk. We agree. Most consumers are paying  far too much for their milk because they don’t know how to shop right.

Let’s be upfront about this. Milk is milk. The milk that goes into a 2 litre bottle of Anchor blue top is the same milk that goes into a budget brand, or one produced by one of the independent operators – like Klondyke, Fresha Valley, Green Valley, Cow & Gate, and so on. The only difference is the price, the shape of the bottle, and the label.

If you want to pay less for your milk then don’t buy the high priced brands – it really is as simple as that. If there is an issue about milk it is not the retail price but the price Fonterra charges independent milk operators, and how much they can buy.

On a related matter, if consumers want to raise questions about food prices then they may want to ask why it is that the retail price of imported food has not come down as the value of kiwi dollar has gone up. Two years ago the kiwi dollar was worth US$0.64. Today it is worth US$0.86. So if a packet of food costs the importer US$1 then two years ago they would have paid NZ$1.56. Today they would pay NZ$1.16. Have retail prices dropped to reflect the lower cost? We doubt it. In theory the price should be driven down by competition, but that of course requires a highly competitive market.

As our community leaders hold multiple enquiries into the price of milk, people, businesses and countries continue to learn a money lesson that those living off the smell of an oily rag have known for years. Debt is bad and saving is good. You don’t have to read too far into the daily news to see that those in financial strife are those with debt, and those doing well are the savers. This goes for a households as well as countries.

It’s such a basic thing. We are of the view every household, business and country must save at least 10 percent of their income. How do they do that? Simple. By spending no more than 90 percent of their income!

The “trouble” with saving, is that it involves choices and sometimes hard work. Sometimes families, businesses, and countries have to live off the smell of an oily rag to make sure they do save. You don’t often hear politicians campaigning on a frugal living platform – which probably explains why many democracies are heavily indebted and beating a path to the loans desk at the Bank of China. China is sitting on mountains of money because as a nation it is saving 50 percent of its income!

Those who don’t save will always live in Struggle Street and depend on others to survive. The alternative is to save and if that means living off the smell of an oily rag then that’s what you have to do. And it can be fun!

We would love to hear your favourite frugal living tips so we can share them with others – please send your tips in via the form on our Oily Rag website or by writing to Living off the Smell of an Oily Rag, PO Box 984, Whangarei. The book Living off the Smell of an Oily Rag by Frank & Muriel Newman is available from all good bookstores or online at www.oilyrag.co.nz.

* Frank and Muriel Newman are the authors of Living Off the Smell of an Oily Rag in NZ. Readers can submit their oily rag tips on-line at www.oilyrag.co.nz. The book is available from bookstores and online at www.oilyrag.co.nz.