The Minister of Agriculture says the Government will not intervene to force down the price of milk, despite calls for it to do so.
David Carter says he will not be advocating the subsidising of dairy products, because there is no reason to artificially establish pricing for any of the country's export products.
Mr Carter says high international prices for export products are good and the benefits will ultimately flow through to all consumers.
The main wholesale milk supplier, Fonterra, announced on Friday it would freeze domestic milk prices for the year.
Supermarkets to freeze milk prices
Progressive Enterprises, which owns the Countdown, Woolworths and Foodtown supermarkets, has also announced that it would freeze the price on all its brands of fresh white milk until the end of the year.
Foodstuffs, which owns New World, Pak'n Save and Four Square, said on Monday it would do the same. It had previously said it would only freeze prices of brands made with Fonterra milk.
Foodstuffs managing director Steve Anderson says people are struggling financially and customers are thinking far more before they buy products.
Mr Anderson says it is a challenge to give suppliers a fair value for their products and consumers the best possible deal. He believes the move should not affect Foodstuffs' bottom line.
Call for 'payback' to the community
The chief executive of the Federation of Family Budgeting Services, Raewyn Fox, says that's still not enough: the Government must go further and introduce price controls.
Ms Fox says New Zealand has put a lot of resources into the dairy industry and there should be some payback to the community.
She says oil is cheap for Middle Eastern citizens and it should be the same for milk in New Zealand.
Mr Carter says, however, that New Zealand must live with the consequences of having its economy tied to the world market, and that it would be inappropriate to intervene beyond checking there is enough competition in the domestic market.
Freeze seen as marketing exercise
Professor of Pastoral Agriculture at Massey University, Jacqueline Rowarth, sees the move by Fonterra and supermarkets to freeze the milk price as a marketing exercise, not a long-term solution.
She says any move towards a formal two-tier system with lower domestic milk prices would have to be a government social policy initiative, as it was in the past when the state subsidised milk in schools.
Professor Rowarth also says the price freeze could backfire on farmers if international dairy prices keep rising.