Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


First statutory review of Fonterra’s milk price manual

Commission releases draft report on first statutory review of Fonterra’s milk price manual

The Commerce Commission has today released a draft report on its first statutory review of Fonterra’s milk price manual. The manual determines how Fonterra calculates the farm gate milk price, which is the price paid by Fonterra to dairy farmers for their raw milk.

This is the first of two statutory reviews that the Commission is required to undertake each milk season under the 2012 amendments to the Dairy Industry Restructuring Act 2001 (DIRA).

This first statutory review requires the Commission to report on the extent to which Fonterra’s milk price manual is consistent with the purpose of the milk price monitoring regime. The purpose of the regime is to promote the setting of a farm gate milk price that provides incentives for Fonterra to operate efficiently while providing for contestability in the market for the purchase of milk from farmers.

“Our initial observations are that Fonterra’s manual is materially consistent with the purpose of the DIRA milk monitoring regime. There are a couple of elements that we consider are inconsistent with the purpose of the Act, but they have only a minor impact. There are also a few matters that we consider may not be consistent, but we don’t have sufficient information at this stage to form a view. We are seeking that information in response to this draft report,” said Sue Begg, Commerce Commission Deputy Chair.

“Given the difficulty of looking at the manual in isolation, we will look more closely at the practical application of some aspects of the analysis when we undertake the second review next year,” said Ms Begg.

The second statutory review each milk season requires the Commission to report on the extent to which the assumptions adopted, and the inputs and processes used by Fonterra in calculating the base price, or farm gate milk price, for the season are consistent with the purpose of the Act.

The Commission is seeking comments from interested parties on the draft report by 15 November 2012. The Commission intends to publish its final report by 15 December 2012.

You can find the draft report on the Commission’s website:


Under section 150H of the Diary Industry Restructuring Act 2001 (as amended July 2012) the Commission must review Fonterra’s milk price manual for each season and report on the extent to which it is consistent with the purpose set out in section 150A of the Act.

The Commission released its report on the dry run review of how Fonterra sets its farm gate milk price (base milk price) in August this year. The Commission undertook this non-statutory dry run review at the request of the Minister for Primary Industries to help inform investors ahead of the launch of Trading Among Farmers, and to show how the Government-proposed milk price monitoring regime would work in practice.

This review is different in scope in two main ways from the dry run review of Fonterra’s farm gate milk price that the Commission undertook earlier this year. The dry run review only considered a number of key assumptions from Fonterra’s milk price manual. This statutory review considers all elements of the manual. The dry run review also considered both the extent of the consistency of the milk price manual with the purpose of the DIRA and the application of the milk price manual. This review is limited to the first of these tasks.

You can find more information about the dry run review on the Commission’s website:

© Scoop Media

Business Headlines | Sci-Tech Headlines


Energy Resources Aotearoa: Doubling Of Coal Use Shows Need For Local Natural Gas

New figures showing a near doubling of coal-fired electricity generation highlight New Zealand’s energy shortage and the need for natural gas as a lower carbon alternative, according to Energy Resources Aotearoa... More>>

E Tu: ‘Sense Of Mourning’ As Norske Skog Mill Set To Close

Workers at Norske Skog’s Tasman Mill now know they’ll be losing their jobs in little over a month’s time.
On Wednesday afternoon, workers were told the mill will be stopping production from the end of June... More>>

Stats NZ: Card Spending Sees Strong Growth In May

Seasonally adjusted card spending rose by $189 million (2.3 percent) between April 2021 and May 2021, Stats NZ said today.
Spending rose across all industries for the first time since New Zealand moved to level 1 in June 2020... More>>

Catalist: NZ’s New SME Stock Exchange, Gets Licence To Go Public

New Zealand has a new stock exchange – designed specifically for small and medium-sized businesses (SMEs) to raise up to $20 million a year from the public.
Called Catalist, the exchange has already been successfully working the private investment sector.... More>>

E-Commerce: Over 40% Of Those Engaged In The Bitcoin Community Are Millennials

Bitcoin has emerged to be a popular topic among millennials with digital currency increasingly being viewed as a potential source of creating wealth through investments. The interest in bitcoin by millennials signals the role this age group plays in the possible realization of the digital currency’s mass adoption... More>>

Stats NZ: New Zealand Is Getting Drier

While there is natural variation in precipitation due to seasons and cycles, New Zealand appears to be getting drier, Stats NZ said today... More>>