Fonterra's online global auction system is not to blame for contributing to falling international diary prices, says Federated Farmers.
A rival dairy company, Open Country Cheese, has published an open letter to Fonterra's farmer shareholders, asking them to push for a review of the system which it says has exaggerated price falls.
However, Federated Farmers dairy section chairman and Fonterra supplier, Lachlan McKenzie, says farmers understand why the prices are decreasing, given the global credit crunch. He says the auction system was a trial so it is right that it is reviewed and perhaps tweaked.
Kelvin Wickham, managing director of Fonterra's global trade, says the auction results are simply reflecting what is happening in the market. He says any possible review of the auction process would be decided on by the shareholders' council and the board.
