The DIRA is New Zealand legislation that brought the creation of Fonterra Co-operative Group by merging the country’s two largest dairy co-operatives, the New Zealand Co-operative Dairy Company and Kiwi Co-operative Dairies, along with the New Zealand Dairy Board.
It regulates Fonterra’s activities in relation to its farmers and other dairy processors and applies over and above the general competition provisions under the New Zealand Commerce Act 1986.
The Ministry for Primary Industries (MPI) launched a review in May 2026 to assess whether the provisions should be retained, repealed, or amended.
At the time Agriculture Minister Todd McClay said: “The review will examine whether the DIRA’s current competition provisions that regulate Fonterra remain necessary, fit-for-purpose, and achieve net benefits for our dairy sector.”
In its submission to the review, Fonterra, which is owned and supplied by around 8,000 farms, said that it is time to modernise the Act.
It is advocating for parts of DIRA to remain, specifically the Milk Price Regime which it believes provides a robust and independent framework, with oversight, for setting a base milk price for Fonterra farmers.
It said that the Milk Price Regime, together with its co-operative ownership model, incentivises Fonterra to pay the maximum sustainable Farmgate Milk Price. Fonterra said this distinguishes it from most other NZ processors which are incentivised to minimise the cost of milk inputs and maximise returns.
The co-operative also supports the Raw Milk Regulations as they play an important role in supporting the supply of fresh milk and dairy products to New Zealanders and allows niche producers, who are focused on bringing innovation to the NZ consumer market, to continue to access raw milk.
However, Fonterra said there were parts of the Act which it considers as no longer necessary as competition in New Zealand’s dairy processing sector has increased substantially since DIRA’s inception.
DIRA provisions were introduced in 2001 when Fonterra collected 96% of farmers’ milk and operated a fully vertically integrated supply chain. Fonterra’s share of farmers’ milk supply has reduced to 78%, and the co-operative has become less vertically integrated through the sale of its consumer arm to Lactatis, earlier this year.
Fonterra said that increased competition, the divestment of its consumer business and the strengthening of the Commerce Act means there is already effective safeguards for competition in place.
