Friday, 15 October 2021 11:25

Draft report on Fonterra's Milk Price Manual

Written by  Staff Reporters
The Commerce Commission has released its draft report on Fonterra's base milk price manual for the 2021-22 season. The Commerce Commission has released its draft report on Fonterra's base milk price manual for the 2021-22 season.

The Commerce Commission has released its draft report following a review of Fonterra’s base milk price manual for the 2021-22 season.

It is also inviting public submissions on the draft report.

The Manual describes the methodology used by Fonterra to calculate its base milk price – the amount farmers receive from Fonterra for each kilogram of milk solids in a dairy season.

The Commission says its preliminary conclusion is that the Manual is consistent with both the efficiency and contestability dimensions of the purpose of the base milk price monitoring regime, with the exception of the rule for the asset beta.

The Commission says it considers a number of issues from previous years to be resolved and there is more transparency overall.

Recent amendments to the Dairy Restructuring Act (DIRA), which came into force on 1 June 2021, mean Fonterra’s discretion in estimating the asset beta has been reduced.

The Commission’s view is that the Manual rule for the asset beta is inconsistent with new requirements set out in DIRA because it potentially allows for an approach different from the approach prescribed in the Act.

In previous Manual reviews and the review of the 2020/21 base milk price calculation, the Commission identified a number of potential issues with how the Manual gives effect to the DIRA definition of “commodity”

Based on the information available, the Commission says it does not consider these matters as rendering the 2021/22 season’s Manual as wholly inconsistent with the DIRA purposes, but the Commission says it intends to examine more closely how the Manual gives effect to the DIRA definition of “commodity” in a future Manual review.

Submissions on the draft report are welcomed and need to be submitted by 15 November 2021.

A final report will be published by 15 December 2021.

More like this

Green light for collective bargaining

The Commerce Commission has provisionally authorised New Zealand Tegel Growers Association Incorporated (TGA) to collectively negotiate on behalf of its members the terms and conditions of its members’ supply of chicken growing services to Tegel Foods Limited (Tegel).

Why Fonterra needs to change

OPINION: Making a change to any businesses is difficult. Augmenting a capital structure with the diversity of stakeholders and complexity as at Fonterra is a significant challenge.

Anti co-operative?

OPINION: Agriculture Minister Damien O’Connor has thrown a spanner in the works as far as Fonterra’s proposed capital structure is concerned.

National

Dairy tops organic exports

Dairy has been named as New Zealand’s largest organic sector with exports of $153.8 million, up 55% from 2017.

Machinery & Products

Gongs for John Deere

The tractor of the Year 2022 Awards, held at the recent EIMA show in Bologna, handed out a brace of…

Digital pre-start safety checks

According to numbers published by ACC, more than 60 farm-related injuries are reported every day, leaving much room for improvement.

JV for Bucket Test App

Irrigation NZ and global farm management company CropX have established a joint venture agreement for the Bucket Test app.

» The RNG Weather Report

» Latest Print Issues Online

Milking It

Poo-powered BMW

OPINION: Car maker BMW is partnering with a California dairy farm to turn effluent into clean energy to power its…

Not bad

OPINION: New Zealand may be a minnow on the global stage but here’s another example how our ag sector punches…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter