10 Sep 2012

Takeover gives certainty to Studholme suppliers - Fonterra

6:40 am on 10 September 2012

Fonterra says a Commerce Commission decision allowing it to acquire the assets of the New Zealand Dairies Limited group in South Canterbury provides certainty for dairy farmers in the region.

In May, the Russian-owned dairy factory at Studholme near Waimate went into receivership and 27 suppliers were left $25 million out of pocket.

Fonterra signed a conditional agreement to buy the New Zealand Dairies Limited plant, but needed Commerce Commission approval to finalise the deal.

Commission Chairman Mark Berry says he's satisfied that a combination of Fonterra's co-operative ownership structure, the regulatory environment it operates in, and its national raw milk pricing strategy, will remove any incentive or ability by Fonterra to reduce the price it pays for milk in South Canterbury and North Otago.

Fonterra started collecting milk from NZDL suppliers at the beginning of August and until it fired up the Studholme plant a fortnight later, had the milk processed at other sites.

Chief executive Theo Spierings says Fonterra's investment in the plant underpins its commitment to the dairy industry in the regions and provides certainty to former NZDL suppliers and staff at the factory.