17 Aug 2015

Fonterra gets initial tick on milk price

3:53 pm on 17 August 2015

The Commerce Commission has released a draft report that says it is satisfied with the way Fonterra calculated its farm gate milk price for last season.

Dairy shed on Clutha Valley farm.

Dairy shed on Clutha Valley farm. Photo: RNZ / Ian Telfer

The commission is charged with checking the co-operative's calculation of its farm gate milk price each year, as part of the Dairy Industry Restructuring Act.

Fonterra's payout for the 2014 -15 season sits at $4.40 per kilogram of milk solids, and is due to be finalised later in the year.

One reason for the Commerce Commission review is to assess whether Fonterra's price allows for competition in the milk market.

Commission deputy chair Sue Begg said Fonterra had made a significant effort to improve the transparency of its calculations.

"Our conclusion is that the assumptions, inputs and the process that Fonterra used to calculate last season's base milk price is largely consistent with the regime's purpose.

"We've had a little bit of feedback on that forecast base milk price. There are some interested parties that think it would be useful if Fonterra were to release more information."

Although the dairy co-operative releases some information about how it calculates the price, the commission was continuing to encourage more openness, she said.

Ms Begg said commission's final report would be released on 15 September.

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