18 Aug 2011

Fonterra and farmers relaxed about milk price inquiry

5:54 am on 18 August 2011

Fonterra and its suppliers say they have nothing to hide from a Parliamentary inquiry into milk prices.

The Commerce Select Committee inquiry will be wide ranging, covering milk pricing from the farm to the retailer.

It will take account of the international market impact on milk prices as well.

In a brief statement, Fonterra says it will make public its formal process for setting the farmgate milk price next month, when it issues its annual results.

Fonterra says it welcomes anything that will bring greater transparency to the issue, but it's confident the inquiry will show that domestic milk prices relate to international prices.

Shareholders Council chairperson Simon Couper says farmers will be thinking that the Commerce Select Committee probe will vindicate the fact that at the farm gate they receive the milk price, that is the international commodity milk price that they would receive if they sold their products offshore.

In terms of the domestic market, or any milk which is taken by independent processors from Fonterra, he says Fonterra farmers receive the milk price, which is approximately 66 cents per litre.

One of the smaller processors who gets most of his milk from Fonterra, Graeme Brown of Klondike Fresh, is also looking forward to more transparency in the pricing structure because he says people are paying too much for their milk.

He thinks the milk regulations, introduced 10 years ago, have become antiquated in a changing market and don't ensure a fair price for milk.

Select committee chairperson Lianne Dalziel says the committee will have only a short time to complete the milk price inquiry before Parliament rises for the general election on 26 November.

Submissions have to be in by 13 September.