The Government has announced changes to the pricing formula for the milk that Fonterra supplies to other dairy processors.
The co-operative is required by law to supply a set amount of milk to its competitors.
The new price - to take effect from the beginning of the new dairy season in June - will be the farm gate milk price plus 10 cents a kilogram of milk solids.
Agriculture Minister David Carter says a 2008 review found the current formula allowed independent processors to buy the milk at a lower price than Fonterra pays its own farmers.
He says this was never the intention of the regulations and the new price will address Fonterra's concerns about that.
Fonterra has welcomed the change.
