Dairy Firms Oppose Milk Pricing System of Fonterra

FonterraThe second largest milk processor of New Zealand Open Country Dairy has appealed for an examination of Fonterra's milk pricing system. Several dairy owners small and big were opposing the poor system of Fonterra, on price fixation of milk products; therefore they demanded bringing price allocation aspect under the dairy guidelines.

Fonterra claimed that they had conducted an independent study on the matter, but the reports of the analysis could not win over the Chairman of Open Country Dairy, Laurie Margrain. Mr. Margain further emphasized on the growing competition in the dairy sector of the Fonterra region New Zealand.

The dairy industry was anticipating the decision of Commerce Commission on holding an independent review of the retail milk prices. As per Consumer New Zealand survey 79% of Kiwis thought the Government should hold an inquiry into milk prices and 91% believed milk prices were far too high.

A report by three anti-Fonterra dairy organisations, Open Country Dairy, Synlait Milk and new processing entrant Miraka revealed that New Zealanders could be paying $195 million for milk every year, which was quiet expensive. On the contrary, Fonterra’s Chief Financial Officer, Jonathan Mason, revealed that the Compass Lexecon report clarified that Fonterra’s way of allocating milk prices was justified.