Commerce Commission to monitor milk pricing
Date: 24 Jan 2012
Competition watchdog the Commerce Commission will annually monitor milk pricing in New Zealand under a raft of Government proposals announced today to rein in Fonterra's market power and restore public confidence in the milk market.
Primary Industries Minister David Carter said Fonterra, which controls about 90 per cent of the raw milk market in this country, would also be required to publicly disclose information about how its sets its milk price, and the farmer-owned dairy cooperative would have to sell 200 million litres more milk a year at a regulated price to other dairy companies.
Carter said the government consultation on its preferred options would be in the form of a draft Bill and draft set of regulations. The draft Bill would also include changes to enable Fonterra to move to its proposed Trading Among Farmers (TAF) scheme should it choose to.
Should Fonterra not proceed with TAF, or if farmers reject the capital restructure plan this year, the Government recommends Fonterra be required to price its shares at "fair" value.
The Government has imposed a tight timetable for submissions with February 24 the closing date for comment.
Consumer New Zealand has welcomed the "extra scrutiny" proposed by the Government for Fonterra's milk price setting.
Editor-in-chief David Naulls said the watchdog was pleased the Commerce Commission was at least involved in auditing Fonterra's price setting and that the results of that audit would be made public.
The Government's plan to increase the total quantity of regulated milk to be made available for independent processors from 4 per cent of Fonterra's annual milk supply to 5 per cent was also positive, Naulls said.
The extra milk could encourage new processing entrants.
More at www.stuff.co.nz.
