16 Sep 2014

Fonterra milk price review finished

6:05 am on 16 September 2014

The Commerce Commission has completed its annual review of the price that Fonterra is paying farmers for their milk.

It said the most significant issue has been the dairy co-operative's decision to pay farmers a price for the 2013-14 season that is less than the price calculated in its Milk Price Manual.

The commission said Fonterra's approach is inconsistent with incentives for it to operate efficiently, but does allow for contestability in the milk market.

In May this year, Fonterra announced a milk price consistent with the manual of $8.95 per kilo of milk solids, but its current milk payout forecast is 55 cents lower than that, at $8.40 a kilo.

The company said the reason for that is due other products such as cheese and casein fetching lower prices than the milk powders which calculations in the manual are based on.

Fonterra will confirm its final payout for the 2013-14 season on 24 September.

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