increase font size
Fonterra chair Peter McBride says Fonterra has been advocating for greater transparency of milk price.
Fonterra is rejecting claims by rival processors that the co-operative can improperly influence the milk price to boost its raw milk supply.
Fonterra says it objects to claims that the co-op is "gaming" the system.
The comments were made in the co-op's submission to parliamentary select committee for primary production.
It is hearing submissions on the Government's proposal to amend the Dairy Industry Restructuring Act (DIRA) to accommodate changes to the co-op's capital structure.
Fonterra chairman Peter McBride told the committee that many of the proposed DIRA amendments seem to address perceptions around the transparency and independence of the milk price regime.
"We respect the national interest in our milk price, considering that in the last financial year Fonterra's milk payments represented $13.7 billion delivered to the New Zealand economy.
"And, as you will hear from our competitors, Fonterra's milk price sets the benchmark for the industry," says McBride.
"So all New Zealand dairy farmers, whether they supply Fonterra or not, benefit from the fair, transparent, and independently overseen price we pay for our farmers' milk."
McBride goes on to say that, for the record, Fonterra objects "to any inference that the co-op or the individuals involved in the process are somehow 'gaming' the system".
"In fact, Fonterra has been advocating for greater transparency of milk prices across the industry in all of our DIRA submissions.
"We continue to propose that DIRA be amended to require all processors to publish prices paid for farmers' milk.
"Improved transparency of milk prices paid by other processors will address the current imbalance of information available to farmers and support contestability in milk supply."
In their joint submission, four rival processors - Synlait, Miraka, Open Country Dairy and Westland Milk - claimed that with the dismantling of the open entry and exit provisions, the regulation of the base milk price remains the only substantive DIRA provision supporting contestability in the raw milk.
The submission acknowledges that the Government has included provisions which provide for increased transparency, oversight, and some independent management of the processes that determine the base milk price.
"These provisions provide crucial changes which can start to bring credibility to the base milk price," it says.
"The provisions do not prevent or limit Fonterra from paying a milk price different to the base milk price.
"Fonterra has nevertheless criticised them as unnecessarily intrusive.
"Fonterra criticism can alternatively be interpreted to be because they reduce Fonterra's ability to control the base milk price."
McBride notes that it's interesting their competitors are questioning the integrity of our milk price calculation.
He points out that, since 2012, the Commerce Commission has raised just two matters related to the inputs, assumptions and processes used to calculate the base milk price, which Fonterra has not promptly addressed to the Commission's satisfaction.
OPINION: There is zero chance that someone who joined Fonterra as a lobbyist, then served as a general manager of Fonterra's nutrient management programme, and sat on the board of Export NZ, a division of lobbyist group Business New Zealand, doesn't understand that local butter (and milk and cheese) prices are set by the international commodity price.
Kiwis love their butter, and that's great because New Zealand produces some of the best butter in the world. But when the price of butter goes up, it's tough for some, particularly when many other grocery staples have also gone up and the heat goes on co-operative Fonterra, the country's main butter maker. Here the co-op explains why butter prices are so high right now.
An A$2 billion bid for Fonterra's Oceania business would be great news, according to Forsyth Barr senior analyst, equities, Matt Montgomerie.
The world's largest dairy company may be in pole position to acquire Fonterra's Australian assets.
Over 85% of Fonterra farmer suppliers will be eligible for customer funding up to $1,500 for solutions designed to drive on-farm efficiency gains and reduce emissions intensity.
Fresh produce grower and exporter T&G Global has overturned last year’s dismal performance by reporting a half year net profit of $1.7 million.
One of New Zealand’s largest fertiliser plants could be forced to shut down for four months as uncertainty looms over gas supply.
Federated Farmers North Canterbury president Bex Green says two public meetings held this week should have made it loud and clear that rural families and businesses are concerned about proposed staffing changes at NZ Police.
The Environmental Protection Authority (EPA) is consulting on a proposal to ban weedkillers containing chlorthal-dimethyl (DCPA).
August 6 marks Farm Worker Appreciation Day, a moment to recognise the dedication and hard mahi of dairy farm workers across Aotearoa - and DairyNZ is taking the opportunity to celebrate the skilled teams working on its two research farms.
OPINION: The Government has been seeking industry feedback on its proposed amendments to a range of Resource Management Act (RMA) national direction instruments.
OPINION: Sydney has a $12 million milk disposal problem.
OPINION: Canterbury milk processor Synlait's recovery seems to have hit another snag.
