23 Oct 2012

Fonterra milk pricing passed by commission

6:35 am on 23 October 2012

The Commerce Commission has given Fonterra a pass in its first statutory review of its milk price manual.

The manual determines how Fonterra calculates the farm gate milk price, which is what it pays farmers for their raw milk.

Under amendments to the Dairy Industry Restructuring Act this year, the commission has to review Fonterra's milk pricing twice each season to make sure it complies with the aim of the price monitoring system.

This is meant to allow Fonterra to operate efficiently, but also provide for contestability in buying milk from farmers.

The commission has issued a draft report of its first review which has gone to Fonterra and others for their comments.

Commission deputy chair Sue Begg said it has found that Fonterra's milk pricing manual generally complies.

Ms Begg said the commission will carry out its second review in 2013, towards the end of the current milk season.