1 Apr 2011

Independent company supports milk inquiry

6:30 pm on 1 April 2011

Independent milk company Klondike Fresh says it would support an inquiry into milk prices.

The Commerce Commission is considering holding an inquiry after it received several complaints.

The commission says it does not undertake price control investigations lightly and will have to consider the amount of competition in supply, manufacturing and retailing before going ahead.

The cost of a litre of regular milk rose by 13 cents to $1.82 between June 2010 and January this year.

Fonterra and the New Zealand's two biggest supermarket chains have frozen their prices until the end of this year.

There are only three independent fresh milk suppliers outside of Fonterra and Goodman Fielder. They are based in Northland, South Auckland and Christchurch.

Christchurch-based Klondike Fresh says it supports a price inquiry because of what it sees as a lack of competition in milk supply.

Director Graeme Brown says his company buys about eight million litres per year from Fonterra under the Dairy Industry Restructuring Act.

It supplies dairies and smaller retail outlets, as well as home deliveries and The Warehouse in the South Island.

However, Mr Brown says it cannot compete with Fonterra while it keeps increasing the price it charges his company for raw milk and at the same time imposes a freeze on the wholesale price to retailers.

Fonterra says there is competition in the market and it does not see the need for an inquiry.