29 Mar 2012

Fonterra milk pricing under greater scrutiny in bill

7:05 am on 29 March 2012

Fonterra dairy co-operative's milk pricing system will come under greater scrutiny as a result of new legislation the Government has introduced.

The Dairy Industry Restructuring Amendment Bill will oversee how Fonterra sets the price it pays its farmers.

It will require the cooperative to publicly disclose information on its milk price setting and the process will be monitored by the Commerce Commission.

The bill also includes changes that will allow Fonterra to introduce share trading amongst its farmer shareholders.

It follows Ministry of Agriculture reviews of the Act and raw milk regulations introduced when Fonterra was formed more than 10 years ago.

Primary Industries Minister David Carter says Fonterra will continue to set the farm gate milk price, but the process will be more transparent.

Mr Carter concedes that probably still will not satisfy some of the independent processors who complain about the price they have to pay to buy milk from Fonterra.

The bill was tabled in Parliament on Monday.

Mr Carter says he expects it to have its first reading in Parliament next week.

But MAF is still working through changes to the raw milk regulations that cover the conditions Fonterra has to follow when it supplies milk to other processors.

It was those regulations that drew most of the comment in the 800 submissions received during the review consultation process.