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Draft report on Fonterra’s 2016/17 Milk Price Manual

Media Release

Issued 14 October 2016

Commission releases draft report on Fonterra’s 2016/17 Milk Price Manual

The Commerce Commission today released its draft report on its annual statutory review of Fonterra’s Milk Price Manual for the 2016/17 dairy season. The Commission’s draft finding is that the 2016/17 Manual is largely consistent with the purpose of the milk price monitoring regime under the Dairy Industry Restructuring Act 2001 (the Act).

Deputy Chair Sue Begg noted that most of the Manual remains unchanged.

“The most significant amendment introduced this year is the inclusion of Fonterra’s sales outside the GlobalDairyTrade auction platform for whole milk powder, skim milk powder and butter milk powder. This shift could result in an increase in the milk price for the 2016/17 season of five cents per kilogram of milk solids,” Ms Begg said.

“We will be better able to assess the Manual’s consistency with the Act once we review how the amendment is applied in next year’s milk price calculation. Overall, we are pleased Fonterra is continuing to look at how it can improve the clarity of the rules in the Manual and its disclosures on their use to enable interested parties to better see how Fonterra would interpret and apply them.”

The draft report recommends Fonterra also considers some further issues, such as disclosing the milk price paid on standard terms to increase clarity on how winter milk premiums and other adjustments are treated in the calculation.

The Commission will review how Fonterra applies the Manual when it assesses the 2016/17 base milk price calculation at the end of the current dairy season.

The Commission welcomes submissions on the draft report by 15 November 2016. The final report will be published by 15 December 2016.

The draft report and related information can be found here.


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