The government has decided that it will be reviewing the raw milk regulations. While on one hand it means that a new set of rules are going to come up for the milk and related industries, on the other it also means that Fonterra is now not going to be forced anymore to supply its milk to the competitors.

The new regulations are going to be key in the Dairy Industry Restructuring Act (DIRA). The act was passed 10 years ago and was done with an aim to make Fonterra a hub for industry mergers.

But since then, the market share of Fonterra has gone down from 96 per cent in the raw milk category to 92 per cent. The market has been kind-of taken over by the smaller milk processors.

The regulation that forced Fonterra to supply close to 50 million liters of milk per year to the competitors has seen that smaller companies are using it against Fonterra in the export markets.

What is also irking the leaders at Fonterra is that some of the competitor companies have their own farm supplies well built up.