Federated Farmers welcome changes to NZ milk prices

Changes to the pricing of milk in New Zealand have been welcomed by the group Federated Farmers. The New Zealand Parliament has agreed to changes for the pricing of milk that Fonterra is required to deliver to independent processors.
“From 1 June 2010, this milk will be the same price as what Fonterra pays its own farmers, plus a margin of 10 cents per kilogram of milk solids,” according to Lachlan McKenzie, Federated Farmers Dairy chairperson. “Independent processors have received an unfair advantage because they’ve been able to buy this milk at a cheap price, when it suits them. This has allowed them to maximise their output by only taking milk when they needed it.
“This new pricing method for regulated raw milk will also allow independent milk processors to make good business decisions based on a fair price.”

The milk also falls within the Raw Milk Regulations, which is part of the Dairy Industry Restructuring Act (DIRA). This was enacted when Fonterra was formed in 2001, to encourage competition. “For practically the whole time this legislation has been in place, regulated raw milk has been underpriced because of a faulty formula,” adds McKenzie. “This has negatively affected Fonterra’s farmers in the pocket.
“This will also stop independent milk processors, who are owned by overseas investors, from getting cheap milk,” he continues. “Some of these firms have based their whole business model on getting milk, not from farmers at the farm gate, but from Fonterra at a cheap price. Federated Farmers has always said this is particularly unfair.”