9 Aug 2011

Need for Parliamentary milk inquiry questioned

1:01 pm on 9 August 2011

Farmers are asking what yet another inquiry into the price of milk is going to achieve.

Prime Minister John Key says the Cabinet is leaning towards support for a Parliamentary inquiry after discussing the issue on Monday and it will go to the National Party Caucus on Tuesday.

Opposition parties have been calling for a Select Committee investigation of the price of milk after the Commerce Commission announced last week it would not be proceed with a full inquiry of its own, at this stage.

The commission said its preliminary investigations had shown there was sufficient competition at retail and wholesale levels.

It noted that Government departments are already looking into the way Fonterra sets the price it pays farmers for their milk.

And the Ministry of Agriculture is also reviewing the regulations covering Fonterra's supply of milk to independent processors.

Federated Farmers dairy chair Willy Leferink thinks a select committee inquiry on top of that is unnecessary and will just add to the confusion.

He also thinks it is premature to hold a Select Committee inquiry into retail milk prices when Government departments are still reviewing the Raw Milk regulations covering the supply of milk to independent processors, and the way Fonterra sets its prices.

Mr Leferink says the milk regulations and the price paid to farmers are interlinked and it would have been wiser for those findings to come out first.

He points out that when international dairy prices slumped a couple of years ago, the retail price of milk came down as well.

Mr Key says consumers need to have confidence that their concerns about milk prices are being taken seriously.