Earlier today, the Commerce Commission today released its final report on Fonterra’s milk price calculation for the 2014/15 season.
The Commerce Commission is required to review Fonterra’s FGMP calculation each year under the Dairy Industry Restructuring Act (DIRA) – legislation that allowed the merger of New Zealand Cooperative Dairy and Kiwi Cooperative Dairies to form Fonterra in 2001.
Fonterra ended the 2014/15 season with a farm gate milk price (FGMP) of NZ$4.40 per kilogram of milk solids (kgMS).
The New Zealand dairy announced an opening FGMP for the 2014/15 season of NZ$7.00 in May 2014. It knocked a dollar off its initial estimate in July 2014, then reduced it to NZ$5.30 in September 2014 and NZ$4.70 in December 2014.
The Commerce Commission published a draft conclusion on Fonterra’s FGMP calculation for the 2014/15 season on August 17.
Having considered public submissions on the draft, the Commerce Commission said its conclusion “remains unchanged.”
As detailed in its final report, published on the Commerce Commission website, the Commerce Commission considers Fonterra’s FGMP calculation for the 2014/15 season to be “consistent with the efficiency dimension” of Section 150A of DIRA.
“We consider that the assumptions adopted, and inputs and process used by Fonterra to calculate the 2014/15 base milk price are largely consistent with the purpose of the milk price monitoring regime,” the report concluded.