Fonterra's obligations to supply raw milk to rivals up for review

Wednesday 13th October 2010

Fonterra's obligation to supply up to 50 million litres of raw milk a year to rivals is to be reviewed a decade after the rules were put in place to ensure competition when the dairy giant was created.

The Raw Milk Regulations will be reviewed next March, Agriculture Minister David Carter said. They formed part of the Dairy Industry Restructuring Act that saw Fonterra created out of the two biggest dairy companies and the Dairy Board.

The review will focus on the rules of eligibility to be able to buy the milk from Fonterra but it must also take account of the cooperative's corporate restructuring, including its move to ‘trading amongst farmers' of the shares. That's to ensure any changes don't stifle competition altogether.

"The regulations are now 10 years old," Carter said "Who should have eligibility to this milk? Should the likes of Synlait, Tatua or Westland be able to take that 50 million litres forever?"

He expected both tasks to be completed on a tight timeframe by November 2011.

Fonterra has welcomed the announcement.

"The dairy industry has moved on since the regulations were put in place ten years ago, and we are looking forward to participating in the review," chief executive Andrew Ferrier said.

Businesswire.co.nz

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